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Fund buyers wary as number of funds repurposed as ESG continues to rise
‘If you simply change nothing and just stick the sustainable badge on, you’re going to face a lot of questions’
An increasing number of conventional funds are being repurposed as ESG or sustainable, but fund buyers have warned asset managers that there is more to changing a mandate than slapping a new label on a fund.
According to Morningstar data published in February, 256 funds repurposed or rebranded as sustainable in 2020, up from 179 the year before. In Q1 this year alone, the number was already at 127.
Morningstar said: “Transforming existing funds into sustainable strategies is a way for asset managers to leverage existing assets to build their sustainable-funds business, thereby avoiding having to create funds from scratch.”
Sponsored feature: Getting to grips with ESG reporting
Mike McCabe of MUFG Investor Services.
The move towards environmental, social and governance (ESG) investing is accelerating fast as regulators take actions – most notably in Europe with the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
The regulation, which came into force on March 10, is seen as a gamechanger for tackling ESG reporting and transparency and will likely have a knock-on effect on other regulatory regimes. It applies not only to EU financial market participants but also to those outside Europe that market their products to EU investors.
Mike McCabe, Chief Commercial Officer at MUFG Investor Services, part of Mitsubishi UFJ Financial Group, says the SFDR is the first real regulatory step to address the lack of transparency in ESG investing, and has generated a lot of interest outside of Europe.
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The EU’s New ESG Disclosure Rules Signal Direction for the Future 10 May 2021
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The EU’s new Sustainable Finance Disclosure Regulation (SFDR) regulations are here, and they signal future change for the rest of the world.
The
Sustainable Finance Disclosure Regulation, considered by the European Commission as the basis of their
action plan on sustainable finance, came into effect on 10th March 2021. Aiming to trigger behavioural change within the finance sector, these new rules require financial market participants and advisers to integrate sustainability risks into their internal
Fund administration: More promise for the unloved ELTIF
The SFDR regulation and the administration of withholding tax have been challenges for third-party fund administrators over the past year. But in our poll of leading figures in the admin industry, we also hear there’s a better future for the ELTIF.
HOPE FOR THE ELTIF
Eoin FitzGerald, MD and office head, BBH Dublin
There had been much speculation about domicile shifts around Brexit, but so far little has changed. Ireland and Luxembourg appear to have copper-fastened their statuses as the leading cross-border fund centres. The recent addition of the Irish Limited Partnership (ILP) to Ireland’s toolkit for private market funds is a welcome addition, particularly with its common law framework and cultural alignment with US and UK alternative managers.