M&G has launched a multi-asset fund which will screen out investments based on environmental, social and governance (ESG) criteria, and select holdings that have a positive impact. It follows the launch of M&G Positive Impact Fund (GB00BG886877) in November.
M&G Sustainable Multi Asset Fund (GB00BHR43049) invests in equities, bonds and alternative assets. It is run by Maria Municchi and Steven Andrew who also manage M&G Episode Income (GB00B7FSJ224), another multi-asset fund.
The managers use quantitative metrics to screen out companies that breach United Nations sustainability principles, and in-house analysis to make sure holdings “exhibit high standards of ESG”. Around 20 per cent of the fund will be invested in impact assets – holdings that have a positive impact on society and the environment.
Ms Municchi will mainly be responsible for managing the impact portfolio. “Some of the biggest challenges the world faces need addressing urgently," she said. "By considering how your investments might affect society and the environment, you can contribute towards a sustainable future."
Mr Andrew has run M&G Episode Income fund since launch in November 2010, and Ms Municchi has been co-manager since January 2017. Since launch the fund has returned 73 per cent versus the Investment Association Mixed Investment 20-60% Shares sector average of 46 per cent. Despite the additional return the fund's average annual volatility and average annual maximum loss are only slightly higher than its sector averages. This is likely to be down to M&G Episode Income's asset allocation relative to those of its sector peers.
There have recently been many launches of sustainable, ESG and impact investment funds. However, Laith Khalaf, senior analyst at broker Hargreaves Lansdown, said there is still not a great deal of investor interest in them.
But he added: “It makes sense [for M&G] to leverage its existing multi-asset expertise and add [a fund to this range with] an ESG overlay. Investors should still consider the manager’s track record and the charges, and make sure its ethical approach [matches their concerns].”
Dzmitry Lipski, investment analyst at broker Interactive Investor, said mixing sustainable investing with multi-asset could be useful, but adds to the complexities investors already face when trying to choose mixed-asset funds.
“This fund's asset allocation ranges look very broad, which gives the managers flexibility, but means investors have their work cut out gauging its level of risk. And that’s after they’ve [tried to establish] whether it meets their sustainability criteria.”
The fund has an ongoing charge of 0.6 per cent.
