20.03.2019 — Berenberg is extending its fund range with sustainable equities fund
Hamburg. In cooperation with Universal-Investment, Berenberg has launched a new ESG fund. Managed by Bernd Deeken, this equities fund, Berenberg Sustainable World Equities, invests in global equities with a focus on sustainability. This makes the fund the third ESG fund of Germany’s oldest private bank, following the Berenberg Sustainable EM Bonds and Berenberg 1590 Stiftung funds launched last year.
Sustainability aspects and ESG (Environmental, Social, Governance) factors have, for some time now, been an essential component of the investment decision-making process for Berenberg’s equities funds, specifically with regard to efficient risk management. The Berenberg Sustainable World Equities (ISIN Tranche R: LU1878855581) fund supplements these aspects with the positive impact that the companies may make in solving global challenges. In this context, issues such as combating drought or addressing demographic change constitute a structural growth area for the companies selected. In addition, the fund managers intend to use their investment and the influence it entails to reinforce the companies’ responsibility for their business activities. The MSCI World Index is the benchmark for the fund’s portfolio of 50 to 80 individual stocks. Second-tier stocks with above-average potential are used as an additive for growth. The management aims for an active share of 80 percent and a high tracking error.
Fund manager Bernd Deeken says, “added value for the environment and society, respectively, and an attractive equities performance do not, in our eyes, exclude each other on account of long-term structural trends. In principle, these sustainability aspects should even improve returns.” In this respect, empirical studies have evidenced a positive correlation between ESG factors and financial performance. Berenberg’s proven exclusion criteria are employed in the investment process; these exclude investments in certain industries, such as armaments or tobacco, for ethical or moral reasons.
The fund’s management pursues an active stock-picking approach that is linked to in-house ESG research – not least because focusing purely on ESG ratings could lead to a “detrimental” selection of shares. The reason for this is that disclosing information and proving answers to long lists of questions are essential components of the ESG grades awarded by rating agencies. Smaller companies in particular often do not respond to questionnaires, due to a lack of resources for example, which means that small and mid-caps frequently have a poor ESG rating – despite a sustainable business model. However, it is often specifically such businesses that offer innovative solutions for global solutions and, at the same time, provide attractive growth rates. In this respect, the fund management can fall back on Berenberg’s extensive know-how in the field small and mid-cap companies.
Henning Gebhardt, Head of Wealth and Asset Management at Berenberg, says, “sustainability criteria are increasingly gaining in importance for fund manage-ment – with both institutional and private investors. With our new fund and our ESG approach, we are responding to this development and taking up our social responsibility.” In 2018, Berenberg opened a Berenberg ESG Office, headed by Dr. Rupini Deepa Rajagopalan, which is responsible for defining the ESG principles and strategy and positioning the ESG investments. In addition, the Office is involved in the development of ESG products and integration of ESG aspects into the investment process. Berenberg also signed the United Nations-supported Principles for Responsible Investment (UN PRI) in 2018.
Berenberg Sustainable World Equities is one of three funds launched by Beren-berg over the past four months. At the same time, the globally investing equities fund Global Focus Fund managed by Martin Herrmann received sales approval. The benchmark-free multi-asset fund Berenberg Variato was launched under the management of Dr. Bernd Meyer at the end of December.