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Quilter Investors seeds River & Mercantile sustainable funds

Quilter Investors seeds River & Mercantile sustainable funds
River & Mercantile launches sustainable equity funds. [Photo by Andrew Neel via Pexels]

Quilter Investors has backed a brace of sustainable equity funds, which will be run by River & Mercantile. 

The R&M European Change for Better Fund, managed by James Sym, and the R&M Global Sustainable Opportunities Fund, to be run by William Lough, will comply with articles 9 and 8 of the European Union's Sustainable Finance Disclosures Regulation. 

Multi-asset investment provider, Quilter Investors, has committed seed capital, via its Cirilium Active portfolios.

The R&M European Change for Better Fund launched on June 21, and the R&M Global Sustainable Opportunities Fund is expected to launch early July.

Both strategies will follow R&M’s Sustainable-PVT investment philosophy, which incorporates sustainability into the team’s long-established process, looking at: potential, valuation and timing.

River and Mercantile's head of equities Sym, said: “We want 2022 to be remembered as the year that the asset management industry started doing ESG properly."

Sym said the team would be investing in companies which expect to make a big improvement in their carbon footprint, as well as those companies which enable this improvement for others.

He added: "This fits well with our contrarian and valuation-orientated mindset. We are looking to buy tomorrow’s ESG stars at yesterday’s valuations.”

Paul Craig, portfolio manager of Quilter Investors’ Cirilium Active range, said: “These new funds represent a great diversification opportunity for our clients.

"We are impressed by R&M’s differentiated approach to sustainable investing, which avoids the typical ESG ‘darlings’, and consequently offers a strong alpha-generating opportunity.

"We have been a supporter of R&M for a number of years and are pleased to extend this successful relationship.”

Lough added: “We believe these funds will make a real-world difference, offer attractive diversification benefits for investors and tap into return drivers which have a long shelf life."

Investment adviser Darius McDermott, founder of FundCalibre and managing director of Chelsea Financial Services, said the range looked interesting, but warned there was a lot of competition out there.

He told FTAdviser: "It is interesting to see two new funds with some seed assets from Quilter. While there is a clear trend to ESG there are not many European and Global funds with a value tilt.

"One of the things they are doing differently is investing in some stocks with poor carbon footprint today but on a journey to substantial improvements.

"I like R&M and they have a strong process (Sustainable PVT) at the centre of their funds. I say they have a good chance of success but it is a very competitive market for Article 9 funds."

simoney.kyriakou@ft.com