Investec is targeting “billions of dollars” of inflows into its newly launched Global Sustainable Equity (GSE) fund, which will prioritise investment into companies that are aligned with achieving the UN’s Sustainable Development Goals (SDGs).
The Guernsey-domiciled fund is already open to both retail and institutional clients of Investec with a minimum investment allocation of $10,000, though the bank says it will be available to a wider pool of investors in due course. Investec will also launch an SA-domiciled version of the fund that will be open to institutional investors at a minimum allocation of R100,000 while a tax-free savings option will be available for retail investors for as little as R10,000. The bank has received regulatory approval for the SA version of the fund, which will likely be available in the next month once related offshore accounts have been finalised.
“I would see this being a fund that really should be able to bring in billions of dollars over the next few years,” Andrew Shard, the chairperson of the Investec GSE funds investment committee, said in a webinar on Wednesday. “This is very much a long-term thematic fund. These SDGs are just non-negotiable as key investment topics.”
SA banks and asset managers are scrambling to assuage increasingly stringent scrutiny of the projects they finance, as shareholder activists such as Just Share chastise them at AGMs due to their support for projects linked to fossil fuels. Many have subsequently committed to scaling back their investments in projects or securities linked to carbon-intensive activities as the world increasingly embraces the goal of achieving net-zero carbon emissions by 2050 in line with the Paris Agreement on climate change.
Investec will be using its own screening methodology to decide which companies to include in its GSE fund, with capital to be allocated only to companies it believes are making a net-positive contribution to the achievement of the UN’s SDGs. The UN SDGs set ambitious targets around 17 variables that include poverty alleviation, clean water, reduced inequality, education, gender equality and other sustainability-linked goals, with a deadline of 2030.
Investec’s GSE fund will hold between 30 and 50 investments in growth-orientated global stocks across a variety of sectors provided they meet its environmental, social and governance (ESG) standards and sustainability requirements. At present top holdings in the fund include Microsoft, Prudential, Apple, Thermo Fisher Scientific, Roche, Medtronic, Novartis, Unilever and Nike.
Roughly 85% of the stocks held in the fund are covered by Investec’s global equity research team while the bulk of the remaining allocations outsourced to third-party funds including the Schroders Global Energy Transition fund. The Investec GSE fund will be benchmarked against the MSCI World Index and will be overseen by a committee based largely in SA and the UK.
“ESG will soon no longer be a nice-to-have for shareholders and asset owners and will ultimately become a default expectation in terms of any long-term asset managers fiduciary responsibility,” said Barry Shamley, a fund manager at Investec. “It’s important not just to look at the revenue and services of each companies. It’s important to look at how the underlying operations are measured with respect to the SDGs.”
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