Schroder Investment Management has launched the Schroder ISF Sustainable Multi Asset Income (SMAI) Fund, a product that aims to provide income within a sustainability strategy, to Singapore’s mass market.
“Singapore is the first Asian market to launch the fund, and information about other launches will be provided in due course,” a Schroders spokeswoman told FSA.
The fund aims to deliver income of 3% to 5% a year paid monthly, by investing across a diverse range of asset classes and regions, including investments that target better sustainable outcomes such as carbon neutral equities and green bonds.
The Luxembourg-registered Ucits was incepted in January this year, and is managed by Remi Olu-Pitan, Dorian Carrell and Jingjing Cui.
The fund has a risk profile comparable to a portfolio of 30% equities and 70% fixed income, and is benchmark unconstrained, according to the spokeswoman.
Its current size is €33.7m ($39.3m), and it is up 1.19% (in US dollar terms) since 21 January, compared with an average return by mixed asset (cautious) funds available to Singapore retail investor of 1.53%, according to FE Fundinfo.
The fund has rallied 29.7% since the nadir in risk asset prices on 23 March, compared with 18.85% by its peers, FE Fudninfo data shows.
“The current crisis has put sustainable investment in the forefront of investors’ minds with growing evidence that sustainable business models are more resilient and better able to withstand market shocks,” said Lily Choh, deputy CEO, Singapore and head of distribution, Southeast Asia, Schroders in a statement.
“For investors seeking income, this challenges the notion that there needs to be a trade-off and you must forgo attractive income if you are investing sustainably,” she said.
Schroders’ latest Global Investor Study of 23,000 people found that 43% of investors in Singapore now frequently invest in sustainable investment funds, which is a marked increase from 31% two years ago.
HSBC Singapore is the exclusive distribution partner for the SMAI fund, whose base currency is in Euros, but it also offers Singapore, US and Australian dollar hedged share classes.
“The fund complements our range of ESG fund strategies [and] balances our customers’ search for yield amid the current low interest rate environment and their desire to make a difference to our environment,” said Ian Yim, head of wealth and international, HSBC Bank (Singapore).
ESG methodology
The investment manager believes that companies demonstrating positive sustainability characteristics, such as managing the business for the long-term, recognising its responsibilities to its customers, employees and suppliers, and respecting the environment, are better placed to maintain their growth and returns over the long term.
Issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value are also considered in the assessment of companies.
Sustainability is integrated into every stage of the SMAI fund’s investment process in several ways, according the Schroders spokeswoman.
These include ESG integration in the multi-asset research process, exclusion screening, identifying companies that exhibit positive transitions through improving ESG scores, and investing in themes that are aligned to the United Nations Sustainable Development Goals.
The team also selects “best in class” sovereigns and companies revealed through the firm’s proprietary ESG tool, such as SustainEx, an investment framework that quantifies the hidden costs of companies’ social and environmental impact.
“We found that the ratings across third-party data providers are not very closely correlated; this lack of consistency raises important questions about how weaker companies are filtered out and has implications for the screening phase of the portfolio construction process,” said the spokeswoman.
“There is also a size bias across mainstream providers, favouring larger companies that tend to have a larger budget for reporting that information third party data providers are looking for,” she added.
Other firms have recently seen an opportunity to tap Singapore demand for ESG products.
Earlier this week, Blackrock filed an application with the Monetary Authority of Singapore to launch its BGF ESG Fixed Income Global Opportunities Fund, Manulife Investment Management began distributing its Sustainable Asia Bond Luxembourg-Ucits in the Lion City, and at the start of September, JP Morgan AM launched its Global Bond Opportunities Sustainable Fund for sale to Singapore’s mass market.
Schroder ISF Sustainable Multi-Asset Income Fund: Asset Allocation
