ESG

The ESG Phenomenon: Blackrock Sustainable UCITS Fund

Editorial Staff 25 October 2022

The ESG Phenomenon: Blackrock Sustainable UCITS Fund

The latest developments in the ESG space.

Blackrock has launched a BGF Sustainable Global Allocation UCITS fund this week following demand from European-based investors for an ESG version of the existing $15 billion BGF Global Allocation Fund. 

The new fund, designed to be a core sustainable holding in a client’s portfolio, incorporates an ESG framework throughout its investment process to meet key sustainable standards in Europe, the asset manager said in a statement. 

Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the BlackRock global allocation investment team, will be the lead portfolio manager of the fund. 

The fund will be managed in a manner consistent with the investment philosophy of the BGF Global Allocation Fund, offering a diversified, flexible, unconstrained multi-asset portfolio, seeking to maximise total return in a manner consistent with the ESG principles of focused investing, the firm added.
 
Blackrock said the fund meets Article 8 under the EU’s Sustainable Financial Disclosure Regulation; it aims to be compliant with the requirements set out by the AMF Category 1 label in France, Febelfin in Belgium, and BVI Target Market Concept in Germany.
 
The fund’s sustainability objectives are achieved through the use of BlackRock’s proprietary externalities framework which evaluates and ranks underlying investments based on their positive and negative externalities. 

It will invest at least 50 per cent of its total assets in securities classified as having positive externalities and exclude securities with negative externalities. The approach helps to incorporate impact from both financial and societal risks related to ESG practices, the firm said. 

As a result, the portfolio is tilted both to issuers that have best-in-class management of E, S and G risk factors and those who have a positive impact on the environment and society as a whole. At least 90 per cent of holdings within the fund are ESG rated, the asset manager said.
 
Rieder said: “We have launched the Sustainable Global Allocation Fund in response to client feedback for an unconstrained multi-asset strategy that can help investors navigate extended periods of heightened volatility whilst also expressing their sustainability preferences.” 

“We have taken the principles from managing the existing Global Allocation Fund and leveraged BlackRock’s proprietary ESG framework to create a unique offering that will serve as a critical source of return for investors in the coming years. The new fund satisfies client demand for a long-term sustainable investment approach from which, importantly, they can expect a similar risk and return profile to our legacy Global Allocation product,” he continued.
 
The fund aims to achieve a lower carbon emissions intensity score for corporate issuers owned within the portfolio, compared with that of corporate issuers of the benchmark. The investment universe is further reduced through the exclusion by security count of the bottom 20 per cent of each component of the benchmark based on MSCI scores and through the use of BlackRock’s EMEA baseline screens to limit exposure to investments in companies associated with fossil fuels, tobacco, controversial weapons, nuclear weapons, civilian weapons or controversial business practices.
 
The fund’s base currency will be denominated in dollars, with hedged and dealing share classes as required, the asset manager said.

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