LGIM launches fund with a 'climate tilt'

LGIM launches fund with a 'climate tilt'

Legal & General Investment Management (LGIM) has launched a new fund aimed at protecting investors against the financial risks of climate change.

The L&G Future World Equity Factors Index Fund will have a “climate tilt” according to the managers.

This is aimed at reducing exposure to companies with worse-than-average carbon emissions and exposure to fossil fuels.

It will also seek exposure to companies that seek to generate revenue from low-carbon assets.

The fund will track a FTSE index, the FTSE All-World ex CW Climate Balanced Factor Index.

Anton Eser, CIO at LGIM, said that the fund was aimed at eliminating climate-change risk from investors’ wealth.

“We are on the path to a low-carbon economy and companies that fail to respond to this reality present a risk to investors’ portfolios,” he said.

Honor Solomon, head of retail at LGIM, added the fund had been created to respond to client concerns.

“The fund retains the transparency and cost-effective characteristics of a conventional index fund, but also gives investors greater exposure to companies that are likely to benefit from the transition to a low-carbon economy.

"We strongly believe that companies who behave more responsibly with respect to climate make better investments in the medium to long term,” she said.

John Ditchfield, financial adviser from green investment experts Castlefield, said the new fund was “undoubtably part of the trend of huge money managers seeking to get on board with environmental and social concerns".

However, he added it was hard to see how environmental the fund was, because he did  not know the components of the index that the fund is tracking.

“The danger is that advisers still have a duty of care to their clients - they need to make sure that what is going on actually reflects clients’ concerns,” he said.