Oct. 10, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 3
Event: Calvert expands its ESG research team.
Briefing Point(s): i) Calvert has added four new senior ESG specialists to its research team, which is headed by Director of ESG Research Jessica Milano, ii) Three of the new hires come from US Federal Agencies including: the Treasury Dept., Federal Energy Regulatory Commission, and Dept. of Agriculture, iii) The additions are viewed as building capabilities to expanding into new product areas and market segments, including the advisory and plan sponsor markets.
Affected Fund(s): All Calvert Funds
Asset Classes: US and Non-US Equities and Fixed Income
Management Company: Calvert Research and Management (Washington, DC)
DD Concern: Consistency of investment analytics/research
Marketing Considerations: After downsizing prior to its acquisition by Eaton Vance, Calvert is on-track to reinforcing its already established position as a sustainable investment fund leader. The firm is 6th largest based on its $13.4 billion in sustainable assets under management. Its expansion into the “public services” sector is notable for strengthening its existing capabilities into growth area.
Oct. 8, 2018
DUE DILIGENCE Alert: LOW
COMPETITIVE Alert: 2
Event: Amundi institutes plan to employ ESG ratings for all its funds.
Briefing Points: i) Amundi, which manages about $1.4 trillion worldwide, has instituted a 3 year plan targeted for completion in 2021, to have all its fund rated according to their ESG standing, ii) Central to the plan, which already has element in place, Amundi will “favour best rated companies” for fund selection and has committed to “double the amount invested through thematic funds” in strong environmental and social impact initiatives, and iii) Amundi who is the parent company of Pioneer Asset Management in the US since 2017, currently has over $200 billion or 19% of it AUM invested in ESG criteria.
Affected Fund(s): All Amundia funds and SMAs
Asset Classes: All
Management Company: Amundi SA (Paris)
DD Concern: Company or fund product governance and/or business practices
Marketing Considerations: The plan is a solid commitment to sustainable investing and at a “grand” level, although the details tend to be somewhat general at this time.
Oct. 6, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 3
Event: Goldman opens a new emerging markets equity ESG off-shore product.
Briefing Points: i) Goldman Sachs has opened its second off-shore emerging markets equity portfolio, ii) The portfolio is a sub-fund of Goldman’s Luxenbourg-based SICAV and will be managed by the same team – lead pm is Luke Barrs –that runs it first emerging markets equity ESG product, and iii) The new sub-fund is being offered in response to high client demand.
Affected Fund(s): Goldman Sachs Emerging Markets Equity ESG Fund
Asset Classes: Non-US Equities
Management Company: Goldman Sachs Asset Management (New York, NY)
DD Concerm: Market share or position
Marketing Considerations: The new clone fund not only suggests growing client demand, in this case non-US institutions and HNW, but possibly also new cash flow or other shareholder characteristics.
Oct. 4, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 2
Event: AllianceBernstien modifies thematic fund’s mandate to ESG strategy.
Briefing Points: i) Effective October 31, AllianceBernstien will change the investment policies for it Thematic Research Portfolio focus on investing in companies with “exposure to environmental and social themes,” ii) The $857 million fund will continue to be managed by Daniel Roarty and will implement a mandate to hold at least 80% of its assets in equities with sustainable investment themes, and iii) Previously the fund, which will also change its name, employed a top down process selecting long-term secular themes.
Affected Fund(s): AllianceBernstien Sustainable Global Thematic Portfolio
Asset Classes: US Equities
Management Company: AllienceBernstien LP (New York, NY)
DD Concern: New untested mandate and/or management team
Marketing Considerations: The fund’s changes are arguably a logical transition from its thematic focus. But it appears to be more of a rebranding move to “jump start” a somewhat lackluster product. It remain to be seen whether it represent a broader firm commitment to sustainable investing.
Oct. 3, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 3
Event: Gurtin purchase gives PIMCO added ESG capabilities.
Briefing Points: i) PIMCO’s purchased muni-bond fund manager Gurtin, and acquires it’s quantitative ESG screening capabilities in the bargain, ii) Gurtin’s founder, CEO and CIO, William R, Gurtin, and his team will remain with the combined business to oversee investment strategies, and iii) Gurtin’s emphasis has been on the HNW market and advisor networks.
Affected Fund(s): PIMCO Municipal Bond Funds, All PIMCO Fixed Income Funds
Asset Classes: US and Non-US Fixed Income
Management Company: Pacific Investment Management Company (Newport Beach, CA)
DD Concern: Portfolio management team change
Marketing Considerations: The added sustainable capabilities will benefit from PIMCO’s deep pockets and help differentiate its sustainability product-line, especially for institutional and HNW markets. Setting aside sustainable investing, the acquisition will help PIMCO’s muni-fund business.
Oct. 2, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 3
Event: Filing for first Vegan ETF.
Briefing Points: i) A SEC filing has been recorded for the first US Vegan ETF has been made, which will invest in companies based on their adherence to “ethical guidelines consistency with veganism,” ii) The ETF, which will track the Beyond Advisors US Vegan Climate Index, will screen-out companies that employ animal testing or “contribute to animal suffering, destruction of natural environment, and climate change.” Further, the index will exclude firms involved with tobacco products, armaments and products specifically designed for military and defense uses or that may contribute to the abuse of human rights or lack of robust, detailed, and independently published policies covering human rights and child/forced labor.
Affected Fund(s): US Vegan Climate ETF
Asset Classes: US Equities
Management Company: Beyond Advisors IC (Jersey); sub-adviser-Penserra Capital Management, LLC
DD Concern: Untested mandates and/or management team
Marketing Considerations: While somewhat of a niche product, it does cater to an established and highly committed market segment. That said, it remains to be seen how the index/ETF is actually constructed around its objectives, what are the actual index constituents as well as fund’s performance track record.
Oct. 1, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 4
Event: PIMCO introduces an Irish-domiciled ESG global bond fund.
Briefing Points: i) PIMCO has opened an ESG global bond fund – an ESG version of their existing $19 billon IG Global Investment Grade Credit fund, ii) PIMCo will employ an ESG integration approach favoring company credentials and sustainability practices, and iii) PIMCO plans to “collaborate with companies” in the portfolio “to improve their ESG practices”.
Affected Fund(s): PIMCO GIS Global Investment Grade Credit ESG Fund
Asset Classes: US and Non-US Fixed Income
Management Company: Pacific Investment Management Company (Newport Beach, CA)
DD Concern: Change in product-line or strategy offering
Marketing Considerations: This is an offshore fund product offshoot that will qualify bonds on the basis of PIMCO’s ESG exclusions, evaluation and engagement practices that have already been introduced in the US and applicable to PIMCO’s total return and low-duration funds. A deeper dive into governance structures and risk considerations, especially in emerging markets, will enable PIMCO to more effectively rank order eligible firms. This strategy may be a prelude to importing a global ESG fund to the US.
Sept. 28, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 3
Event: BlackRock iShares offers new London Stock Exchange listed ESG emerging bond ETF.
Briefing Points: i) BlackRock has opened a new ETF that invests in debt issues from emerging markets where regulatory, data and public awareness of ESG factors is growing, ii) Seed capital for the passively managed portfolio is provided by a.s.r., a Dutch insurance company, and iii) The new ETF will track the JP Morgan ESG EMBI Global Diversified Index. In order to calculate the environmental, social and governance (ESG) scores, the index allocates each security with a score from one to five. The index excludes bonds that have any involvement in thermal coal, tobacco and weapons or are violators of the UN Global Compact principles.
Affected Fund(s): iShares JP Morgan ESG $ EM Bond ICITS ETF (EMES)
Asset Classes: Non-US Fixed Income
Management Company: BlackRock, Inc. (New York, NY)
DD Concern: New untested mandate and/or management team
Marketing Considerations: New ESG fixed income offerings and particularly those related to emerging markets can be expected to be attractive, especially to non-US and global institutions. A deeper dive into governance structures and risk considerations in emerging markets, in particular, will enable BlackRock to more effectively rank order eligible firms.
Sept. 27, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 2
Event: Goldman opens real estate ESG product in Belgium.
Briefing Points: i) Goldman Sachs has teamed with a Dutch bank to offer 2 “capital guaranteed notes” that invest in a REITs index — the Euronext Reitsmarket GRESB Global Sustainable Index — sustainable selections, ii) The fund’s 30 selections are made by screening the REITs index constituents for “ESG awareness and transparency,” and iii) Goldman has teamed with Dutch sustainable analytics company GRESB and distributor, Nagelmackers Bank.
Affected Fund(s): Goldman Sachs Capital Guaranteed Notes
Asset Classes: Non-US REIT
Management Company: Goldman Sachs & Company (New York, NY
DD Concern: New untested mandate and/or management team
Marketing Considerations: This may product may not be designed for all retail investors and calls for proper suitability vetting. While exposure is to the underlying 30 REIT selections, the performance of the guaranteed notes is likely linked to the creditworthiness of Goldman Sachs.
DEFINITION — ALERT RATINGS
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Due Diligence (“DD”) Alert: Ranks each identified sustainable fund event or development according to a three-point “call to action” scale that ranges from Low to High, defined as follows:
LOW: A preliminary review and evaluation is recommended, but no on-going monitoring or manager meeting is needed.
MODERATE: Near-to-mid-term review and evaluation is recommended along with a manager meeting.
HIGH: Immediate manager contact and meeting are recommended, plus detailed review and evaluation – scheduled on-going more detailed monitoring and follow-up manager meeting(s) are advised.
Marketing Considerations: Ranks the level of required response/urgency for each identified sustainable fund’s product development, sales, promotional or other strategic marketing event or development. The ranking scale is 1 to 5, where a rank of 1 indicates the lowest level of urgency, requiring little or no competitive response, to a rank of 5 that indicates the highest level of urgency, requiring immediate competitive and/or marketing and sales force response.
