Quintet Private Bank today announced the launch of the “world’s first multi-asset, climate-neutral investment fund”, Essential Portfolio Selection (EPS) Quintet Earth after raising some 280 million euros in funding. This UCITS fund “combines equal exposure to green bonds and low carbon equities”. The fund offsets associated carbon emissions through reforestation activities.
“Really, when we think about most funds, they operate within the financial markets, they buy and sell,” explained James Purcell, Quintet’s Group Head of Sustainable Investment. “And they don’t step outside of that. Quintet Earth reaches outside the financial market and touches the real world in a very positive way.”
The fund has two asset classes, Purcell explained. “Green bonds that help fund the transformation of our economy” and “low carbon equities that have 70% less carbon than a traditional global portfolio.”
Positive environmental benefits
All of the fund’s green bond proceeds are exclusively invested in projects designed to generate positive environmental benefits, Quinet said in a release. Those carbon emissions are offset through the annual purchase of carbon credits derived from community reforestation projects. “We are planting literally tens of thousands of trees, to make sure that every tonne of carbon associated with the portfolio is put back into the earth in long term reforestation,” explained Purcell.
“Clients ask, what does my money do? It’s a really good question. And the answer for the vast majority of liquid sustainable funds, it’s actually really hard to say,” he commented. “But we can answer the question categorically, what is my money doing, which is your money is helping plant 1000s upon 1000s of trees, and those trees are undoubtedly, scientifically based, capturing carbon, if you hadn’t bought Quintet Earth from us, that would not be happening.”
Simple story
Purcell emphasised that the fund can appeal “appeal up and down that sustainability spectrum,” with a “simple story” “We have a highly efficient, cost effective, balanced portfolio here for you, which has companies in it that have strong governance and good environmental credentials, and some bonds where we have a lot of transparency.”
Quintet Earth is managed by asset manager DWS, which has 880 billion euro of assets under management. DWS has a deep environmental, social and governance focus, said Quintet.DWS has set up a passive structure replicating the Bloomberg MSCI Global Green Bonds and MSCI World Low Carbon Equity Target indices.
Purcell explained the benefit of this approach. “The first is to bring this at a really attractive price, we want this fund to be accessible to people and to be fairly priced. And by doing it through the indices, we can achieve that and thus come at a price point that is significantly lower than many multi asset products.” He explained that the two indices have strong track records. “We’re not asking people to take a leap of faith on a brand new, complex active strategy with 26, proprietary elements, this is something that is proven to work.”
Community reforestation
Quintet describes Quintet Earth as a liquid, multi-currency fund, with daily trading and a recommended 3-5 year holding structure that is transparently priced. Performance, the company says – “including green bond use of proceeds and community reforestation benefits” – is reported every month.
Quintet Earth’s carbon offset activities are managed in partnership with myclimate, which is described a global leader in carbon dioxide compensation measures.
Purcell explained that Quintet has had “fantastic period of raising money” to launch the fund with 280 million euros. “That’s a superb way to launch a fund for any institution,” he said. The next step is to bring the fund out through Quintet’s channels. The private bank has a presence in nearly 50 cities across Europe. Potential clients in Belgium may have to wait longer, due to the additional regulatory approval required there.