BLI - Banque de Luxembourg Investments (BLI) and Funds For Good on Friday unveiled two new joint impact funds; the FFG European Impact Equities and FFG American Impact Equities. Classified as Article 9 under the EU’s Sustainable Financial Disclosure Regulation, the funds build on a decade-old collaborative partnership between the firms.
Both funds are structured as sub-funds under FFG’s Luxembourg-domiciled Sicav which was first registered at the end of 2016. According to the prospectus, the funds invest a minimum of 10% in sustainability objectives, investing in companies that achieve at least 5% of their sales from activities aligned with the United Nations’ Sustainable Development Goals, or SDGs. At least 20% of its portfolio needs to be aligned with the SDGs.
FFG’s mid-year report shows that the FFG European Impact Equities Fund held 20 million euro in assets per 30 June. Its portfolio consists of about 30 companies. The biggest holding, 4.57 percent, was in GEA Group, a German industrial group that makes equipment for the food and beverage sector. Industrials accounted for a third of its portfolio.
The FFG American Impact Equities fund held 23 million per end June, some 40 percent of which was invested in industrials. Healthcare accounted for 30 percent.
Two-fold benefits
The new funds aim to offer investors two-fold sustainability and impact benefits: firstly, via the sustainable investments made by BLI teams, and secondly, through post-investment local impact initiatives steered by Funds For Good Impact.
“Our intention was to develop a management methodology that integrates sustainability and impact generation at the heart of portfolios. We’ve been working with FFG for almost ten years and… having them at our side for this new project seemed an obvious choice,” said Fanny Nosetti-Perrot, CEO of BLI, said in a statement.
With offices in Brussels and Luxembourg, Funds for Good is an impact investment business modelled as a for-profit NGO. On its website, the firm says it intends to donate 50 percent of its own profits as well as minimum percentages (10 to 20 percent) of its income to SDG objectives.
Questions about tangibility
Nicolas Crochet, co-CEO and co-founder of Funds For Good, said BLI is the first company to embrace their business model. “Despite advances in responsible investment practices, many questions remain about the tangibility of certain investment products. So it was only natural that we decided to pool our strengths to create investment solutions that offer a dual and complementary view of impact,” Crochet said in the statement.
The investment methodology relies on BLI’s “Business-Like Investing” approach that has been aligned with the SDGs, the firm said.
“We’ve developed an approach based on the ‘Impact, Quality, Value’ triptych,” said Tom Michels, who was named manager of the FFG European Impact Equities fund. “Our aim is to invest in companies whose products or services make a direct and significant contribution to achieving one or more of the SDGs. We’ve opted to address both social and environmental concerns to benefit from the interconnections between different themes.”
Managers
Michels joined BLI in 2014 after his studies in Lausanne and previously managed the BL European Small & Mid Caps fund.
The FFG American Impact Equities will be managed by Luc Bauler with Julien Jonas as co-manager. Eight share classes will be available in US dollars. Bauler joined BLI in 1996 and managed the BL Equities and the BL Global Flexible funds. Jones, who joined BLI in 2017, previously was responsible for the SRI strategy at BLI.
BLI already offers the BL Sustainable Horizon fund, a 100 million euro fund managed by Annick Drui with Joël Reuland as co-manager. In an interview with Investment Officer, Drui last year spoke about the challenges of managing such funds, in particular when it comes to making decisions based on incomplete non-financial data.
The Funds for Good June 2023 Sicav prospectus also makes reference to a number of Article 8 SFDR funds, including the 34 million euro FFG European Equities Sustainable Moderate fund, the 259 million euro FFG Global Flexible Sustainable fund, the 36 million euro FFG European Equities Sustainable fund, and the 83 million euro FFG Cleantech II fund.
FFG’s total Sicav portfolio was worth a total of 428 million euro per end June, down from 434 million at the end of 2022.
FFG has named Waystone as the management company for all the sub-funds under its Sicav. Next to BLI, Acadian Asset Management and Capricorn PArtners are named as managers.