ESG drive
Sustainability is another pillar of Folksam’s fund selection process, which Bolin-Gärtner is keen to expand further. “We aim to have a basic level of sustainability and all the funds we invest in, apart from one, have signed the UN PRI [Principles for Responsible Investment] convention,” she says. “We, for instance, asked Fidelity to comply with the UN PRI guidelines, and helped them to implement that.”
UN PRI signatories commit only to a very basic level of ESG reporting, but Folksam aims to offer clients a more stringent ESG proposition. “As we only work with external fund managers, it is very important for us to transparently inform our end clients, and therefore we like the funds to fill out a sustainability report, too.”
The company has already included a few ESG index trackers with positive screening on its list but wants to expand its offering in the active space.
“We recently added an emerging market equity fund that performs positive ESG screening, Nordea Emerging Stars [see chart 3], and strive to add actively managed ESG funds for all main equity regions,” says Bolin-Gärtner.
“We like funds that use ESG as a factor in their investment process.”
According to Expert Investor research, three-quarters of Swedish fund selectors are prepared to make some concessions with regards to performance when investing in ESG funds. Bolin-Gärtner, however, is uncompromising: “We want funds that combine good performance and sustainability.”
Bolin-Gärtner also has a couple of theme funds on her selection list, some of which fit under the ESG label. “We have a renewable energy fund and a healthcare fund but also a natural resources fund.”
While she would like to have more of these funds on her list, it is not always worth the effort since take-up by clients can be modest. “I would like to have a water fund on board, for example, but some of my competitors have told me that these funds don’t attract much money at all.”
However, not all ‘green’ funds are so unpopular. She says: “We do offer a green bond fund within fixed income, and that market has grown lately.”
