Fund manager giants NN Investment Partners (NNIP) and Irish Life Investment Managers (ILIM) have further cemented their partnership with the launch of three new sustainable equity funds.
Earlier this year, the two firms announced a joint venture to manage a range of sustainable enhanced equity index strategies, launching an emerging markets fund in March.
The three new Luxembourg-registered enhanced index funds, which enable investors to invest responsibly while closely tracking an established stock index, will focus on global, North American and European equities.
The latest funds bring Netherlands-based NNIP’s managed assets under the sustainable equity range to almost €4bn.
While passive investment products that track indices have proliferated in the past decade, there have been few options available on the market for investors who wish to invest responsibly.
By incorporating exclusions as well as a positive selection approach, these sustainable enhanced index solutions blend the low tracking error of passive funds with a much stronger sustainability profile, NNIP said.
This approach enables investors to ESG factors into their equity portfolios at a modest cost while targeting risk-adjusted returns comparable to those of the traditional benchmark.
“Traditional passive funds that simply replicate a benchmark do not incorporate any selection criteria based on sustainability and have no scope to reward sustainable companies,” Jeroen Bos, head of specialised equity and responsible investing at NNIP, said.
“The active decisions that we integrate into our sustainable enhanced solutions means that investors can incorporate these elements effectively in their portfolios.”
ILIM manages the risk exposure of the fund after targeting sustainable companies to ensure that the portfolio does not contain any unintended risks. This means that performance will be broadly in line with market returns.
Shane Cahill, head of indexation business at ILIM, said: “Irish Life has been adopting responsible investment practices across our business for many years. Expanding our indexed solution to provide additional options for clients which incorporate responsible investment principles is a key priority and our partnership with NNIP supports that ambition.”
ILIM, a subsidiary of leading life assurance group Great-West Lifeco, has seen its indexation business undergo significant growth in recent years, with assets under management now exceeding €50bn.
