American Century Investments (ACI) and Nomura Asset Management (NAM) have joined forces to launch an emerging markets impact fund using the UN’s Sustainable Development Goals (SDGs) as an investment overlay.
The American Century Emerging Markets Sustainable Impact Equity Fund, a sub-fund of Nomura Funds Ireland, is run by ACI’s senior portfolio manager Patricia Ribeiro and portfolio manager Sherwin Soo, supported by team of five analysts. This team currently runs $4bn (€3.6bn) in emerging markets assets and the new UCITS fund will follow the same investment philosophy and process of the American Century Emerging Markets strategy with the differentiator that it will have the ESG/SDG overlay.
The Impact fund will actively invest in 70-75 companies that demonstrate accelerating growth, located primarily in emerging markets, while contributing to one or more of the UN’s SDGs. The group said there are 17 goals, of which 15 are investible goals that sit alongside the firm’s investment process. SDGs were adopted by all UN Member States in 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030.
The fund aims to make a positive social and environmental impact in emerging markets and provide excess return above the MSCI Emerging Markets Index, while also seeking long-term growth.
ACI’s team currently measures impact in South America, China, Thailand, South Korea, Taiwan, Indonesia, India and South Africa.
Peter Ball, managing director at NAM UK, commented: “The Emerging Markets Sustainable Impact Equity Fund will be our second UCITs collaboration with our strategic partner ACI. Investors increasingly want their portfolios to provide financial security but to also address key global issues, both of which can be achieved through positive social and environmental impact without sacrificing investment returns.”
Senior portfolio manager Ribeiro added: “We believe an asset manager can offer both dedication to investment performance and an opportunity to make real change for good in emerging markets around the world.”
Commenting on the new launch, Louisiana Salge, impact specialist at EQ Investors, said: “It is always encouraging to see new funds launching that aim to make a positive contribution to people and planet through alignment with the UN SDGs. We believe that emerging markets are crucial in achieving the UN SDGs’ underlying targets, and we are continuously seeking new fund opportunities in this space that demonstrate best practice impact investment approaches.
“The UN SDGS are currently still differently translated into business and investment relevance. We have not seen detail on the investment process of this new fund yet, but would hope that as an ‘impact’ strategy it will have a solid process in place to seek investment opportunities in companies that can demonstrate intentional, material and additional impacts through contributing to solutions aligned with the SDGs, alongside a solid ESG integration and engagement process. We would also expect to see impact measurement and reporting, given that this is a key prerequisite to impact investment strategies.”
