Martin Currie, a specialist investment manager of Franklin Templeton, has launched its first social impact fund.
A sub-fund of the Franklin Templeton Global Funds plc range domiciled in Ireland, the FTGF Martin Currie Improving Society Fund2 is categorised as Article 93 under the EU's Sustainable Finance Disclosure Regulation (SFDR). It will be registered for distribution initially in France, Italy, Luxembourg, Netherlands, Sweden and the UK.
This new social impact global equity fund aims to deliver long-term capital growth while advancing fairness of social opportunity and narrowing the equality gap. It will invest in a concentrated, high conviction and long-term portfolio of 20-35 companies globally that contribute to three impact pillars: improving well-being, improving inclusion and supporting a just transition toward a sustainable economy.
With more than 70 years of combined investment experience in global and international investing, the fund's investment team consists of Martin Currie's Edinburgh-based Lauran Halpin, Portfolio Manager and Head of Impact Equities, and John Gilmore, Portfolio Manager, Impact Equities and Stewardship, Sustainability & Impact Specialist. David Sheasby, Head of the Stewardship, Sustainability and Impact team, will act as an advisor to the investment team; Sheasby has expertise in active ownership and impact frameworks.
Commenting on societal development objectives generally, Halpin said: "these objectives have historically been grossly underfunded and abandoned in some communities to focus on other important issues like climate change and Covid-19. The Organisation for Economic Co-operation and Development (OECD) estimates there is a $2.5 trillion4 annual funding gap in meeting the UN Sustainable Development Goals (SDGs).
"There is a significant opportunity to create impact at scale by investing in companies that are contributing to pressing societal needs like providing access to clean drinking water, healthcare and education as well as financing job re-skilling for working in a green economy."
Halpin has extensive experience in managing sustainable funds and ESG research, particularly in areas relating to climate change and healthcare. Gilmore has been with Martin Currie since 2019 and dedicated to supporting Martin Currie's stewardship and sustainability strategy since 2020.
Halpin continued: "This new fund invests in companies innovating to address societal needs with long-term growth potential, which in turn encourages cash flow and returns and reinvestment into addressing other societal issues. Companies with products that make a difference in people's lives can benefit from long-term profit pools generated by ongoing societal needs and ultimately gain a competitive advantage."
The strategy also aims to deliver strong risk-adjusted returns; the social impact investment universe has historically had lower volatility than and comparable returns to the MSCI All Country World Index *.
The portfolio management team have developed a proprietary impact framework and will measure the social impact companies create through company-specific key performance indicators (KPIs) and engagement objectives. Additionally, the team will measure the contributions of the underlying companies against seven socially - focused SDGs. These are: No Poverty (SDG 1), Zero Hunger (SDG 2), Good Health and Well-Being (SDG 3), Quality Education (SDG 4), Gender Equality (SDG 5), Clean Water and Sanitation (SDG 6), and Reduced Inequalities (SDG 10).
Mel Bucher, head of global distribution for Martin Currie, said: "This exciting new launch brings to market our first Article 9 fund and provides clients with an innovative social impact fund. Importantly, the investment team have designed and built this strategy to access portfolio companies that aim to achieve intentional and real impact. We envisage the portfolio will include underlying holdings that are not owned in conventional global equity funds and will therefore complement existing allocations."
Anne Simpson, Global Head of Sustainability, Franklin Templeton said: "Martin Currie's Improving Society Fund is an exciting new offering that will leverage the team's deep expertise in both sustainability and stewardship. With a focus on social impact, we believe there is opportunity to deliver superior risk adjusted returns to our clients by investing in companies that contribute to the UN Sustainable Development Goals."
