A climate change fund, considered “groundbreaking” for its use as a default fund in the UK national workers’ pension scheme, has revealed how it tilts its exposure and it may be launched in other fund structures.
Sempra Energy, a US natural gas-fired plant operator, is one of the companies that the UBS Life Climate Aware World Equity fund holds higher exposure to due to the fund’s tilt towards eco-friendly companies in the FTSE Developed Index.
Meanwhile, oil majors like Exxon are given less investment, UBS Asset Management told Funds Europe.
The fund’s top five exposures (at February 28) are PG&E, Sempra Energy, Edison, SSE and ADP.
Its lowest exposures are Exxon, Royal Dutch Shell, Duke Energy, Chevron and Southern Co.
Nest, the UK’s national pension scheme for workers, announced in February that it had seeded the UBS fund with £103.3 million of investment.
Assets have since grown to £150 million, UBS Asset Management said, and the firm is considering launching versions of the life fund in other formats, which potentially means a Ucits product.
Paul Clark, head of corporate governance services at UBS Asset Management, said the fund had also engaged with Glencore, a commodity trading and mining company, and Bayer, a life sciences company. Engagement issues with Glencore included the firm’s coal assets and its first report around climate change.
As reported previously, the fund aims to deliver returns broadly in line with the FTSE Developed Index, but increases exposure to eco-friendly companies. The positive tilt towards investment in companies considered vital to combating climate change, such as renewable energy producers, mean these businesses could get a 40% higher exposure versus the benchmark.
At the time of Nest’s investment, Mark Fawcett, Nest’s chief investment officer, said the fund “breaks new ground” and that the fund would mean Nest could reduced its members’ exposure to firms with high climate impacts, and invest early in industries and technologies that will help the global economy move away from fossil fuels.
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