JP Morgan Asset Management is the latest firm to seek to tap into the growth of environmental, sustainable and governance (ESG) funds with a product launch.
The JP Morgan Global Macro Sustainable fund will be run by the team that already runs a range of macro funds at the company, including Lucy Reid and Shrenich Shah.
The fund will have an annual charge of 0.75 per cent and exclude sectors it deems not appropriate for an ESG fund, such as tobacco and fossil fuels.
This is done at the revenue level not just the business level. So, for example, it will not invest in any company that generates more than 5 per cent of its revenue from tobacco, even if the company itself isn’t a tobacco business.
Nicola Rawlinson, lead investment specialist on the macro strategies investment team at JP Morgan, said a major issue in the industry is firms offering products that appear to invest in a way that appeals to ESG investors, but in fact they have many investments that clients would not consider ESG compliant.
This is a phenomenon known as “greenwashing” and is something about which fellow fund house Baillie Gifford has also expressed concern.
Ms Rawlinson said assessing companies based on their revenue was a way to combat this.
Massimo Greco, head of EMEA funds at JP Morgan Asset Management, said: “We’re delighted to be extending our established macro franchise with this new sustainable offering.
"There’s been a lot of client interest in this type of fund. As the macro landscape continues to evolve, our macro strategies investment team have demonstrated, time and again, their expertise in dynamically shifting exposures to pursue positive returns in varying market environments.
"In light of the increased volatility this year, it’s arguably more important than ever for investors to have exposure to flexible strategies.”
Benjamin Benson, investment analyst at GDIM in Cambridge, said: “We like the JPM Macro suite, and alternative strategies in the ethical space have been hard to come by, so this certainly looks useful.
"It will be interesting to see how the ESG overlay impacts performance and correlation to other asset classes, which have both been attractive in the past."
In July Aviva Investors announced the launch of a sustainable income and growth fund for investors planning their retirement, while Investec Asset Management launched a UK Sustainable Equity fund in February.
Wealth manager Brooks Macdonald said this morning it expects its ESG product range to be a source of growth in the years ahead.
The firm's chief executive Caroline Connellan said she had seen greater interest from advisers in sustainable funds and the firm was keen to respond to that.
david.thorpe@ft.com
