Investment managers at Mediolanum International Funds (MIFL) discuss their latest funds at the recent MedMe event in Dublin, and highlight why they have stepped up action to tackle climate change. It also talked about Chinese equities and debt against the background of the country’s shifting economic fortunes.
A European investment house has rolled out a range of ESG-focused
funds, arguing that tackling human-caused climate changes remains
an urgent challenge. Separately, it reflected on the sort of
asset allocation that makes sense around China.
Furio Pietribiasi, CEO of Mediolanum
International Funds (MIFL), highlighted at the firm’s 25th
anniversary event in Dublin this month how it
has launched nine ESG-focused funds.
The funds come under Articles 8 and 9 of the EU’s Sustainable
Finance Disclosure Regulation (SFDR). “We wanted to wait to
launch the funds under Articles 8 and 9 of the SFDR and have been
developing strategies that fit the criteria to help firms
transition,” Pietribias told this news service in an exclusive
interview.
“We wanted to provide our clients with access to ESG-focused
funds and we do this by delegating it to specialists. We mainly
target climate change to have a greater impact,” Christophe
Jaubert, chief investment officer at MIFL, said.
A report by Allfunds Data Analytics presented at the event
shows the growth of sub-advised funds in the funds industry, with
ESG funds driving that growth. MIFL said it experienced a 94 per
cent increase in ESG mandates, making it the industry’s
highest growth among the funds’ platforms belonging to
banking groups, both on a one-year and three-year basis. See
more here.
At the samee event, Imna Conde head of ESG at MIFL told this news
service that they had one ESG-focused fund in 2018 and to
manage it they set up a specific committee in 2022. “Now we
have nine ESG-focused funds, with another two in the pipeline,”
she said. “Climate change is the biggest trend for us and we
try to align the funds with four of the UN’s Sustainable
Development Goals (SDGs), focused on climate action, gender
equality, affordable and clean energy, and responsible
consumption and production,” Conde added. “To measure the impact
across these, we have mapped six principal adverse impacts
(PAIs),” Conde continued.
While the ESG trend has had its fair share of bumps in the road -
such as the lag of “green” funds behind those investing in fossil
fuels during 2022, when the Russian invasion of Ukraine roiled
energy markets, and the problems of “greenwashing”, the
phemonenon appears to retain momentum. High temperatures in parts
of the world during summer, with forest fires in southern Europe,
for example, and other concerns, kept the topic high on the
political and media agenda. An issue is that cutting carbon
emissions has become politically more difficult as the costs of
transition coincide with a period of rising inflation.
ESG-focused funds
Funds under Article 9 of the SFDR include MBB Energy Transition
and MBB Future Sustainable Nutrition. “The fund is co-managed by
Black Rock and Pictet, who have experience in this theme and also
have very different views on how to approach the sustainable
nutrition theme,” Conde said.
The fund aims to provide investors with exposure to the
sustainable nutrition theme and the evolution of a new food
system which addresses the unsustainable health, climate and
waste problems of the current worldwide food production system.
MIFL highlighted that food systems account for over one
third of global greenhouse gas emissions, with 45 per cent of
food produced lost or wasted. Yet in 2020, between 720 and
811 million people faced hunger, rising from 2014. With the world
population set to hit 10 billion by 2050 and the food system
accounting for 30 per cent of emissions, MIFL said precision
agriculture which optimises crop productivity is a key tool
for achieving this. It will enable farmers,
for instance, to target their fertilizer application more
precisely. Adopting this technology is expected to
accelerate in the future.
This news service has carried a number of articles recently about
how wealth managers are paying more attention to food production
and its demands. Population pressures, wars, supply chain
disruptions and the impact of new technologies have shaken up the
space. See here
and here.
Asia-focused funds
Pivoting away from ESG issues, the firm also talked about its
approach to the Chinese economy.
Jaubert said that MIFL has around 70 different funds, which are
balanced between fixed income and equities. The firm is neutral
in equities and slightly overweight in duration, he added.
Of these funds, the GAMAX Asia Pacific Fund predominantly
invests in equities in the Asia-Pacific region, including
emerging Asian economies, such as China. Top holdings include
Chinese tech giant Alibaba and Taiwan Semiconductor Manufacturing
Company (TSMC) which posted better-than-expected earnings in the
third quarter of 2023, helped by strong demand for artificial
intelligence (AI) chips.
Jaubert told this news service that they also recently launched a
China Equity Fund, which is continuing to grow, and an Indian
Equity Fund this year, with India touted as one of the world’s
fastest-growing eonomies. See more here.
The China fund is co-managed by Steven Lux, CEO of Hong Kong’s
Foundation Capital, which focuses on investing in Chinese
equities. Lux believes that robotics, automation, healthcare and
renewables will shape China’s future. With the country producing
more than 70 per cent of all solar photovoltaic panels, half of
the world’s leading electric vehicles and a third of its wind
power, he has direct exposure to renewables, notably solar. He
also likes consumer goods, such as sportswear, and said that the
food and drinks sector continues to grow.
Despite concerns over China’s slowing economy, he said it is
currently in a down cycle. “It’s been there before and every time
the market pulls through,” he told this news service. There
are also early signs that the economy is improving, Lux
added.
Latest figures show that China’s GDP growth in the third quarter
of 2023 exceeded economists’ expectations, reaching 4.9 per
cent year-on-year, putting Beijing’s 5 per cent 2023
GDP growth target within reach. The quarter saw a sharp increase
in retail sales, particularly for restaurants, alcohol, and cars,
offsetting a drag from the property market. Lux believes
that now is a good time to invest in Chinese equities.
MIFL is a management company approved by the Central Bank of
Ireland to manage UCITS or undertakings for the collective
investment in transferable securities, which are investment funds
regulated at EU level, and non UCITS funds.
