Fidelity International has enhanced its equity fund range with the launch of Fidelity Funds First environmental, social and governance All Country World fund.
Utilising Fidelity’s in-house research, the fund aims to achieve long-term capital growth by focusing on companies that maintain strong environmental, social and corporate governance (ESG) credentials.
In particular, it aims to deliver a portfolio with an attractive ESG profile, higher average ESG score and a lower weighted average carbon intensity compared to that of the broader market.
The fund, which launches with assets under management (AUM) of just $80m (£62.7m), is constructed using Fidelity International’s fundamental bottom-up research process which is skewed towards companies with the highest ESG rating.
This type of fund it may under perform if one of the sectors it excludes does very well but hopefully the stock-picking will compensate for that. One to watch.Darius McDermottIn addition, its investment universe will be screened to exclude companies that derive a significant portion of business revenue from activities which typically have negative ESG outcomes; these activities can include the manufacture or distribution of alcohol, weapons, firearms, tobacco, gambling and adult entertainment.
The fund also implements a controversial weapons exclusion list.
The fund is not constrained by company size, sector or geographical allocations.
Instead, companies are selected using a bottom-up selection process implemented by managers Matt Jones and Hiten Savani, who collectively have over 32 years’ investment experience.
John Clougherty, head of UK wholesale at Fidelity International, said: “As the regulatory environment continues to evolve and investors look to invest responsibly, many of our clients are looking for innovative and robust approaches to enable them to implement ESG portfolios while continuing to achieve their risk adjusted return objectives.
“We have designed the Fidelity First ESG approach specifically to allow clients to achieve these two goals.”
Darius McDermott, managing director of Chelsea Financial Services, said: "There is a bit of information lacking in the initial release about the number of companies in the investible universe, fund costs, etc, but on the face of it this looks like a reasonable proposition.
“The ESG scoring criteria will be outsourced and then the Fidelity team - which is very well resourced and with a good global reach - will pick the stocks they think will do best.
“As always with this type of fund it may under perform if one of the sectors it excludes does very well (as tobacco has done over the years), but hopefully the stock-picking will compensate for that. One to watch."
emma.hughes@ft.com
