Cars should be electrically powered, beef replaced by plant-based substitutes and an eye kept on whether our goods have been produced under decent conditions. Sustainability and responsibility have increasingly become important parameters of competition for attracting consumers – and when investors invest their capital. Equity fund Global Sustainable Future is a good example of the phenomenon.
Since its introduction in September 2020, Danske Invest Global Sustainable Future has passed DKK 5 billion in net deposits from investors, while the strategy overall now has more than DKK 23 billion in AuM, as it is included in Danske Bank’s investment solutions, for example.
The core focus of the strategy is to find those companies that will contribute to solving the world’s sustainability challenges and thus be an attractive investment.Simon Christensen, chief portfolio manager
Background to the fund
Danske Invest Global Sustainable Future invests in companies that contribute to attaining a number of the 17 Sustainable Development Goals (SDGs) proposed by the UN – such as green energy, clean water and sanitation plus good health and well-being. The UN has estimated that the 17 SDGs together potentially present a market opportunity of up to USD 12,000bn going forward to 2030.
“The green transition is a global megatrend that potentially presents a particularly attractive return potential if you manage to invest in the right companies leading and benefiting from the transition to a sustainable future. The core focus of the strategy is therefore to find those companies that will contribute to solving the world’s sustainability challenges and thus be an attractive investment,” says Simon Christensen, who manages the fund alongside Martin Slipsager Frandsen.
Growth potential tied to UN Sustainable Development Goals
When the portfolio team select equities, they start off by completely objectively narrowing the global investment universe down to around 300 companies that have a solid sustainability performance, are high quality and contribute to the UN’s 17 SDGs.
“Next, we look in detail at the individual companies and, for example, set goals for which sustainability initiatives we believe they should live up to. This way we ensure that all our investments contribute something tangible to a sustainable future. Right now, we are invested in 37 companies where we see a good sustainability potential,” says Martin Slipsager Frandsen.
Risks and EU categorisation of the fund
While an investment in Danske Invest Global Sustainable Future presents attractive return opportunities, there are also risks you should be aware of. The fund pursues a long-term strategy, and its target is to deliver an annual excess return relative to the global equity index MSCI World. This means you also risk earning a lower return than the equity market in general – it will depend on the portfolio managers’ ability to select the right equities.
Danske Invest Global Sustainable Future has after 10 March 2021 been categorised as an ESG fund (article 8) in accordance with the EU’s Sustainable Finance Disclosure Regulation. Right now, we are in a transition period during which we are adjusting to the new EU regulation. We therefore expect the fund to be classified as an article 9 fund in the course of this year.
Global Sustainable Future in brief
- Fund strategy is based on companies that support a number of the UN’s 17 SDGs.
- The team invests in 30-40 global companies that all support the UN SDGs.
- Investments are spread broadly across regions and sectors, so global risk diversification is high.
- Management team utilises the resources of one of Europe’s largest Responsible Investment teams.