Man AHL launches its first climate-focused systematic fund

Man AHL, Man Group's diversified quantitative investment engine, has launched its first systematic Article 9 fund.

Man AHL TargetClimate is a risk-managed, multi-asset fund that invests in assets aligned with the transition to a low-carbon economy. 

It is categorised as an Article 9 fund under the Sustainable Finance Disclosure Regulation (SFDR), and is Man AHL's first Article 9 fund, as well as Man Group's first systematic Article 9 fund.

Using a data-driven approach, the team at Man AHL leverage multiple data sources and the expertise of Man Group's Responsible Investment (RI) and data science teams to identify and select securities most aligned with the transition to a low-carbon economy within multiple asset classes, namely equities, credit, government bonds, commodities and green bonds. 

Removing any particular social and governance laggards, the approach is best in class, looking for securities that rank highly across a variety of environmental metrics amongst AHL's liquid universe. 

The portfolio has been constructed to provide a balanced, systematic allocation across asset classes, with the aim of delivering a stable return profile through different market environments, be it growth, high inflation or recession. 

Incorporating Man AHL's proprietary risk management techniques, it also uses highly liquid futures as a hedge during difficult market conditions, allowing the fund to dynamically manage risk while maintaining its stable long portfolio of assets aligned with the climate transition.

Crucially, the fund does not rely on a ‘climate alpha premium' - in other words, it doesn't claim to allocate to climate-focused securities in order to generate outperformance. 

Instead, TargetClimate's investment edge comes from its systematic portfolio construction and risk management techniques. This allows climate considerations to be the primary driver of security selection within the portfolio's investable universe, while maintaining attractive risk and return characteristics for investors.
 
Man AHL TargetClimate's environmental performance will be measured against a Paris aligned benchmark that is targeting a decarbonisation of around 7%pa. Transparency is key, with AHL reporting across a range of environmental metrics.
 
Matthew Sargaison, CEO at Man AHL, said: "We are pleased to launch Man AHL's first climate-focused fund and to continue diversifying Man AHL's offering to investors. We developed AHL TargetClimate because we saw a real opportunity to bring our multi-asset, risk management and quantitative expertise to a space that has traditionally been the domain of discretionary investors. 

"The strength in our approach is that the ongoing debate about whether ESG leads to better returns doesn't enter into the equation; we can focus all of our efforts on allocating to the securities that are most aligned with climate change mitigation within our investable universe while still offering an attractive risk/return profile based on our tried and tested portfolio construction and risk management techniques."

Otto Van Hemert, director of core strategies at Man AHL, said: "Identifying securities that are climate aligned is a complex and nuanced exercise. There is a lot of noise and it requires a data-driven approach to clean, analyse and gain insights from the multiple data sources available, something we have been doing across AHL for over thirty years. 

"With the support of our RI, stewardship and data science teams, our goal is to offer investors a systematic, climate-focused investment solution that is intellectually sound and robust, and that will adapt as new data, insights and technological advancements arrive."

Robert Furdak, CIO for responsible investment at Man Group, said: "AHL TargetClimate is a strong addition to our RI-focused fund range, leveraging our quant capabilities to deliver a truly innovative climate-focused product for clients. 

"This fund has been built from the ground up to meet the rigour of Article 9 status and we are proud of the work we have done collectively to develop frameworks that evaluate the ESG characteristics of non-corporate assets. We look forward to welcoming investors into the fund as we continue to expand our RI-focused offering."

Founded in 1987, Man AHL is one of the longest running systematic investment managers, trading over 800 markets and managing assets for institutional and private clients globally.