AXA IM launches onshore Clean Economy fund for UK investors

AXA Investment Managers (AXA IM) announces the launch of the AXA ACT Framlington Clean Economy fund, an onshore version of the successful global thematic equity strategy it has been running for three years^[1].

The launch of the UK onshore fund is part of AXA IM’s strategy to further develop its range of sustainable funds available to UK-based investors which will continue to expand in 2021 and beyond, signifying a growing demand for these strategies in the market.

The new UK-domiciled fund, which is an official reshaping of the AXA Framlington European Fund, is part of a move to consolidate AXA IM’s UK fund range and offer clients more relevant and sustainably managed global equity funds, as well as offer more options for potential growth.

The fund aims to provide investors with both long-term capital growth and a sustainable investment objective, in line with a responsible investment (RI) approach, mirroring the existing offshore AXA WF Framlington Clean Economy fund.

Managed by Amanda O’Toole, the fully ESG-integrated strategy invests in companies operating across the clean economy, whose activities support the energy transition and the drive toward resource optimisation, waste and pollution reduction.

The strategy invests across four key sub themes that offer measurable clean economy indicators (CO2 emissions, water intensity, waste management etc.) and allows the fund to invest across a diverse range of themes. This approach also allows the fund to tackle a number of the UN’s Sustainable Development Goals (SDGs), as outlined below:

1. Low carbon transport (SDG 7 and 13) – Investing in the low carbon transport value chain from car makers, battery producers and enablers such as connectors and semiconductors.
2. Smart energy (SDG 7, 11 and 13) – Companies supporting the energy transition by producing and supplying renewable energy, digitalising electricity networks and improving energy usage in factories and cities.
3. Agriculture and food industry (SDG 12, 13 and 14) – Innovative companies which help improving yield, encouraging people to adopt sustainable food consumption habits or reducing food waste.
4. Natural resource preservation (SDG 6, 11, 12 and 13) – Businesses which mitigate environmental damage by reducing waste, facilitating recycling, monitoring and resolving pollution.

The strategy applies a high conviction and selective investment approach. To construct the investable universe, a combination of quantitative and qualitative filters is applied to build the ‘CleanTech’ thematic filter,^[2] which identifies companies who seek to have a positive environmental impact, and is applied to all globally listed equities – alongside AXA IM’s Sectorial Policies and ESG Standards – to select the most relevant and eligible companies. Fundamental investment analysis is then applied to the remaining universe to build the portfolio which consists of 40-60 stocks^[3].

The AXA WF Framlington Clean Economy strategy is also part of AXA IM’s ACT fund range^[4] and applies AXA IM’s Impact approach for listed assets, where the investment decisions are designed to have an intentional, positive, measurable and sustainable impact on society and/or the environment while simultaneously aiming to deliver financial returns.

Five percent of the management fees paid by the fund will be donated by AXA IM to the Epic Foundation^[5], as part of the company’s initiative to support charities that focus their action on themes which are at the heart of AXA IM’s Corporate Responsibility and Responsible Investment strategies and in alignment with selected UN SDGs.

Commenting on the launch, Amanda O’Toole, manager of the AXA Clean Economy strategy, said: “2020 was a pivotal year for many businesses within the clean tech universe. Global sales of electric vehicles (EVs) accelerated and the cost of renewable energy continued to fall significantly, alongside the consumer shift towards more sustainable diets. Such trends have also resulted in more opportunities being created for businesses that facilitate recycling and reusing practices.”

“The strategy can offer investors diversified access to these multi-decade growth opportunities across four key sub themes that are driving the global transition to a ‘cleaner’ economy. Selecting the right companies from such a large and diverse pool of investments can prove a challenge, which is why we believe a differentiated dual thematic and Impact Investing approach is key with investors benefitting from our active, long-term approach to the clean economy.”

John Stainsby, Head of Core Client Group UK, added: “The launch of the fund demonstrates our ongoing commitment to delivering sustainable, long-term value for clients while driving meaningful change for society and the environment. In a drive to offer our UK-based clients more relevant global equity funds with a sustainable and responsible investment focus, we are pleased to launch an onshore fund for UK investors that can also deliver access to high quality companies operating across industries which are working towards a zero-carbon economy.”

Risks

The value of investments may fall as well as rise and you may not get back the full amount invested.

Concentration Risk: as this Fund may, from time to time, hold relatively few investments, it may be subject to greater fluctuations in value than a fund holding a larger number of investments.

Currency Risk: the Fund holds investments denominated in currencies other than the base currency of the Fund. As a result, exchange rate movements may cause the value of investments (and any income received from them) to fall or rise affecting the Fund’s value.