{"id":4240,"date":"2024-10-10T20:21:37","date_gmt":"2024-10-10T20:21:37","guid":{"rendered":"https:\/\/sdgnews.com\/?p=4240"},"modified":"2024-10-10T20:21:39","modified_gmt":"2024-10-10T20:21:39","slug":"morningstar-the-10-largest-funds-aligned-to-sustainable-development-goals","status":"publish","type":"post","link":"https:\/\/sdgnews.com\/ru\/morningstar-the-10-largest-funds-aligned-to-sustainable-development-goals\/","title":{"rendered":"Morningstar: The 10 Largest Funds Aligned to Sustainable Development Goals"},"content":{"rendered":"\n

By Liz Angeles<\/strong><\/a>, Morningstar<\/em><\/p>\n\n\n\n

Investors seeking clues about where society is headed\u2014and which trends could benefit\u2014might look at the Sustainable Development Goals. Adopted by United Nations members in 2015, the 17 Sustainable Development Goals<\/a> form a wide-ranging plan to grapple with poverty, equalities, climate change, and other challenges, while promoting economic growth. Since then, the U.N. has tracked progress annually<\/a> for such issues as reducing child mortality, preventing HIV infection, and improving access to energy and mobile broadband.<\/p>\n\n\n\n

For investors, the SDGs \u201cwere developed by governments looking at what society needs to do by 2030 to be better. It\u2019s useful to refer to SDGs as means of framing the targets that you\u2019re trying to solve and objectives you\u2019re trying to achieve,\u201d<\/em> says Lindsey Stewart, director of stewardship research and policy for Morningstar Sustainalytics<\/strong>.<\/p>\n\n\n\n

Yet only a few dozen funds and exchange-traded funds are tied directly to the SDGs, partly because of the uneasy relationship between achieving financial returns while realizing nonfinancial outcomes. That may change as companies start accounting for their impacts on the world around them. New European rules<\/a> require companies to disclose their environmental and social impacts, to help shareholders and others assess sustainability performance and related risk. These are issues<\/a> that affect companies over the long term.<\/p>\n\n\n\n

The 2030 agenda<\/a> is currently not on track to reach its goals. One reason is the limited SDG funds that are currently available. Those numbers will grow.<\/p>\n\n\n\n

Stewart says it is important for investors to assess what themes align with their personal goals and incorporate exposure to those goals in their portfolios. This process may include some research into stocks in line with the SDGs. \u201cThere are plenty of thematic funds that focus on water, health, education, or gender equality,<\/em>\u201d says Stewart<\/strong>. And Stewart is optimistic that, increasingly,\u00a0asset managers will use the SDGs in investing<\/a>.<\/p>\n\n\n\n

How We Compiled Our SDG Funds List<\/h3>\n\n\n\n

To compile a list of 56 SDG funds, we ran a screen on open-end and exchange-traded equity funds in the Morningstar universe that mentioned \u201cSustainable Development,\u201d \u201cSDG,\u201d or a related term in their name. We included funds from all domiciles but only used the oldest share class. From there, we narrowed the list by removing all funds of funds and all funds without their holdings available. This resulted in a list of 44 funds that use the sustainable development goals in their strategy or that track an index that uses the sustainable development goals in their strategy. From this finalized list, we filtered the funds by fund size. Illustrated are the largest 10 funds.<\/p>\n\n\n\n

\"Largest<\/figure>\n\n\n\n

1. Northern Trust UCITs Common Contractual Fund \u2014 NT World SDG Screened Low Carbon Index Fund A EUR ACC<\/strong><\/p>\n\n\n\n

Morningstar Rating: 5 Stars<\/p>\n\n\n\n

ESG Risk Rating Assessment: 4 Globes<\/p>\n\n\n\n

The investment objective of the fund is to closely match the risk and return characteristics of the MSCI World Select ESG Leaders Low Carbon Impact G Series Index (the index) with net dividends reinvested. Any change of index shall only be made with the prior approval of the unitholders, according to fund literature.<\/p>\n\n\n\n

This fund has relatively low exposure to ESG risk compared with its peers in the global equity large-cap Morningstar Category, earning it the second-highest Morningstar Sustainability Rating of 4 globes. It promotes ESG criteria within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. Funds in accordance with Article 8 or Article 9 are more likely to align with the expectations of an investor who cares about sustainability issues. One key area of strength for this fund is its low Morningstar Portfolio Carbon Risk Score of 4.44 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation, according to Morningstar Manager Research.<\/p>\n\n\n\n

2. DWS Invest SDG Global Equities XC<\/strong><\/p>\n\n\n\n

Morningstar Rating: 4 Stars<\/p>\n\n\n\n

ESG Risk Rating Assessment: 4 Globes<\/p>\n\n\n\n

This subfund promotes environmental and social characteristics. While it does not have as its objective a sustainable investment, it will invest a minimum proportion of its assets in sustainable investments as defined by the EU\u2019s Sustainable Finance Disclosure Regulation. The fund aims to achieve a positive mid- to long-term investment performance by investing in companies that management considers to be in a position to profit from present or future geopolitical, social, and economic trends and themes that help to achieve the sustainable development goals of the U.N. as part of the Agenda 2030. The subfund is actively managed and is not managed in reference to a benchmark, according to fund literature.<\/p>\n\n\n\n

This share class is in the cheapest quintile of its Morningstar Category. Its competitive expense ratio, paired with the fund\u2019s People, Process, and Parent Pillars, indicates that this share class is well-positioned to generate positive alpha against its category benchmark, explaining its Morningstar Medalist Rating of Bronze.<\/p>\n\n\n\n

Currently, the fund has 8.2% involvement in fossil fuels, which is roughly in line with 7.6% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas. The fund has a modest level of exposure (7.40%) to companies with high or severe controversies, according to Morningstar Manager Research.<\/p>\n\n\n\n

3. NT Europe SDG Screened Low Carbon Idx Fd A EUR Inc<\/strong><\/p>\n\n\n\n

Morningstar Rating: 4 Stars<\/p>\n\n\n\n

ESG Risk Rating Assessment: 4 Globes<\/p>\n\n\n\n

The investment objective of the fund is to closely match the risk and return characteristics of the MSCI Europe Select ESG Leaders Low Carbon Impact G Series Index with net dividends reinvested, according to fund literature.<\/p>\n\n\n\n

By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, and thermal coal. The fund fulfills this goal as its investment exposure to each of these activities is negligible. The fund aims to avoid or minimize holdings in companies breaching international norms, including the U.N. Global Compact or the Universal Declaration of Human Rights. The fund has no exposure to high or severe controversies.<\/p>\n\n\n\n

Over the past two years, it beat the category index by an annualized 2.1 percentage points and outperformed the category average by 4.6 percentage points. And more importantly, when looking across a longer horizon, the strategy outpaced the index, according to Morningstar Manager Research.<\/p>\n\n\n\n

4. Robeco Global SDG Engagement Equities I EUR Capitalisation<\/strong><\/p>\n\n\n\n

Morningstar Rating: 2 Stars<\/p>\n\n\n\n

ESG Risk Rating Assessment: 3 Globes<\/p>\n\n\n\n

The subfund aims to provide long-term capital growth while at the same time promoting certain ESG characteristics and integrating sustainability risks in the investment process. A primary objective is to drive a clear and measurable improvement in a company\u2019s contribution to the United Nations Sustainable Development Goals over three to five years. The subfund aims to motivate invested companies to improve their fulfillment of the U.N. SDGs by actively engaging and having an active dialogue with these companies. In addition to pursuing the sustainable investment objective, the subfund at the same time aims to provide long-term capital growth. The subfund will take exposure of at least two thirds of its total assets to equities of companies all over the world that mainly operate in mature economies (developed markets). The subfund has a focused, concentrated portfolio with a small number of larger bets, according to fund documents.<\/p>\n\n\n\n

Robeco Global SDG Engagement Equities promotes ESG criteria within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. Funds in accordance with Article 8 or Article 9 are more likely to align with the expectations of an investor who cares about sustainability issues. One key area of strength for Robeco Global SDG Engagement Equities is its low Morningstar Portfolio Carbon Risk Score of 5.22 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy, according to the Morningstar Manager Research.<\/p>\n\n\n\t\t

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