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Value spotting

With hundreds of funds available to UK DFMs, it is hard for many providers in the market to claim their new launch addresses an underserved need.

But ESG value funds are a rarer beast, and that may explain why demand has been strong in 2022 for the Schroder Global Sustainable Value fund which, with a net three new DFMs acquiring it, is the most bought fund on a net basis fund in the IA Global universe in 2022.

The fund was only launched in August 2021, and in that period of just over a year it has gathered £622m of assets and is held by three DFMs in our database.

The most popular global equity fund in our database, for context, is Fundsmith Equity which is held by seven DFMs.

The Schroders fund is run from within the broader, and very well-known, value equity team at the fund house.

Launching a new sustainable mandate was very much in vogue in 2021 but with the struggles endured by many ESG mandates in 2022 it is worth looking at the performance.

Exposure to the value factor will have helped some global equity funds during this year of rising interest rates.

When we took a look at global equity outperformers earlier this year, many of them had the word "value" in their name, and it is perhaps something for allocators to ponder that the merits of the value style reads across into the sustainable investment universe. 

At the other end of the spectrum, Baillie Gifford's Positive Change fund, another mandate from the broad ESG investing universe, is the most sold fund in the IA Global universe in 2022, with a net three DFMs heading for the exit.

It is now held by just one lone DFM.

Baillie Gifford is, of course, known for its growth style of investing. 

The chart below shows the relative performance of the two funds over the past year. 

These two trends are, of course, in greater emphasis in our database of ESG funds.

Here the Schroders fund has had a net five buyers this year and it has now overtaken the Baillie Gifford Positive Change fund in terms of popularity, being held by seven DFMs.

The difference in approach between these two funds is in full view when examining where they invest.

Baillie Gifford Positive Change has a 46 per cent exposure to the US while the Schroders fund only has a 22 per cent exposure.

The single biggest regional exposure of the Schroders fund is to Europe ex-UK at 35 per cent.

Indeed we look at the sister fund of the Schroders vehicle, the £249mn Schroder Global Sustainable Growth, which was launched in January 2021 and has only attracted one DFM buyer in our database (and none among ESG portfolios), we find a much more similar approach to that taken by global equity funds in recent years.

Here the single biggest regional exposure is a 53 per cent weighting to the US.

Perhaps the lesson here is that ESG funds are evolving beyond their traditional growth focus and that DFMs have noticed.

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