Morgan Stanley Investment Management has launched its Global Sustain Fund to the UK market.
The Luxembourg-based fund has already attracted investor assets of $700m in under 18 months, demonstrating strong demand for ESG integrated funds.
Since its inception last April, the vehicle has delivered an annualised return, net of fees, of 16% – outperforming the 3.92% returns from the MSCI World Index benchmark, the fund manager stated in a media statement.
According to Morgan Stanley data, the fund generated a gross return of 12.54% and net return of 11.58% between August 2018 and August 2019, compared to the MSCI World Index net return of 0.26%.
The fund offers UK investors a concentrated portfolio of companies which are carbon light, and tobacco, alcohol, and fossil fuel free.
The portfolio also has explicit restrictions against investing in companies that generate significant revenues from adult entertainment, bulk commodities, gas and electrical utilities, and gambling.
William Lock, head of MSIM’s international equity team, which manages $47bn of assets, commented: “In our experience, the best way to compound shareholders’ wealth over the long term is by owning very high-quality companies with sustainable high returns on operating capital.
“Today’s more uncertain world demands a keen focus on material ESG risks and opportunities as well as active long-term engagement with companies. With Global Sustain we offer compounding with a conscience and the integration of material ESG issues while maintaining our commitment to investing only in high quality compounders,” Lock added.
Richard Lockwood, MSIM’s head of distribution for Northern Europe, said investor interest in ESG products continues to accelerate.
“The market reception to the [Global Sustain] strategy since launch last year demonstrates our clients’ appetite for a high quality ESG integrated strategy from a proven team,” Lockwood commented.
