Amanda O’Toole

AXA Investment Managers (AXA IM), with A$1.38trn in assets under management as at end of 2021 globally, has announced that it has unveiled two new funds in Australia – the AXA IM Global Green Bond Fund and AXA IM Clean Economy Equity Fund.

According to the global asset manager, Australian wholesale investors are building sustainable portfolios and are seeking more quality and actively managed responsible offerings, particularly in the fixed income space.

The two funds complement AXA IM’s flagship Sustainable Equity Fund, which was launched in Australia in 2014, and further strengthen its responsible investment offering in support of the global transition to a low carbon economy.

AXA IM Global Green Bond Fund

Having had a dedicated green bond strategy since 2015, AXA IM is a green bond pioneer, managing over A$20bn worth of green bonds as at end of 2021.  As green bonds have increasingly attracted the attention of investors engaged in the decarbonisation of their assets, the AXA IM Global Green Bond Fund seeks income and growth for investors from an actively managed portfolio of green bonds through a master-feeder structure^[1].

Using a proprietary green bond framework, AXA IM seeks to invests in eligible green bonds with issuers that have an overall sustainability strategy consistent and aligned with green bond projects. These projects have the objective of demonstrating a positive environmental impact by financing the energy and ecology transition.

The underlying fund aims to support a number of the UN’s Sustainable Development Goals by investing across four main sub themes – low carbon transport, smart energy, green buildings and sustainable ecosystem.

“As the battle against climate change drives solid growth in the worldwide green bond market, the universe is increasingly well diversified across regions, sectors and industries and now makes for a credible alternative to the conventional bond universe,” said Portfolio Manager, Johann Ple. “We expect the green bond market to grow in excess of EUR600bn this year and as it does, become even more attractive to investors.” Mr Ple added.

AXA IM Clean Economy Equity Fund

Likewise, through a master-feeder structure, the AXA IM Clean Economy Equity Fund has a dual objective of delivering long-term investment growth and a positive and measurable impact on the environment.

The fund is an actively managed portfolio of high-quality, growth-oriented companies operating in key investment areas impacted by the finite amount of natural resources^[2].

“The underlying fund invests in public-listed companies that have high potential for growth as they support, through innovative solutions, the drive towards decarbonisation and resource optimisation, as well as the decrease in waste and pollution,” said Portfolio Manager, Amanda O’Toole.

Also aiming to support a number of environmental UN’s Sustainable Development Goals, the underlying fund provides a high conviction portfolio of typically 40-60 listed equity and equity-related securities of companies in the clean economy. These global companies are largely focussed on energy transition and resource optimisation such as low carbon transport, renewable energies, responsible agriculture, food, water protection, natural resource preservation and recycling and waste reduction.

She added, as concerns over the sustainability of human civilisation on earth deepen, investors are demanding more of companies to respond to the need for change. “We believe businesses that continue to innovate and invest in solutions and enabling technology to present the best growth opportunity and potential to deliver positive impact towards our transition to a net zero world”, said Ms O’Toole.

Market seeking diversification in RI

“Since introducing one of the first responsible investing options for wholesale investors in Australia with the Sustainable Equity Fund in 2014, we have seen incredible growth in responsible investing in this country.  Investors are increasingly seeking to expand their portfolios beyond core equities with ESG integration by taking advantage of the growing diversification and liquidity in the global green bond market,” said Michelle Lacey, Head of Client Group, AXA IM Core, Australia.

“These two fund launches underpin our commitment to invest responsibly and provide Australian investors the potential to deliver more sustainable financial returns over the long-term based on our long-established responsible investing expertise”, Ms Lacey said.

“We expect the global economy will move to a more sustainable and equitable model over the coming years, and we want to be an active partner for Australian clients as that transition takes place. It’s important to consider how we, as responsible investors, can promote positive change for the present and the future of our people and planet,” she added.

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[1] The AXA IM Global Green Bond Fund substantially invests in the Master Fund (AXA WF ACT Green Bonds, an open-ended Luxembourg fund), which invests a minimum 75% of its net assets in bonds financing environmental projects (Green Bonds).
[2] The AXA IM Clean Economy Equity Fund substantially invests in the Master Fund (AXA WF ACT Clean Economy, an open-ended Luxembourg fund) which invests at least two thirds of net assets in equities and equity-related securities of worldwide companies that seek to offer growth potential and are active in areas such as the sustainable transport, renewable energies, responsible agriculture, food and water production and supplies and also recycling and waste reduction.

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Joining in May 2021, Mr Green brings more than 20 years’ experience in asset management distribution capability to the firm to support and strengthen AXA IM’s relationships with Australian wholesale investors.

Based in Sydney, Mr Green will report to Michelle Lacey, who is Head of Core Client Group, Australia at AXA IM.

Mr Green joins from Colonial First State Investments where he was a business development manager. Prior to that, Mr Green held business development roles with Zurich Investments, NAB Asset Management, Russell Investments and Nikko Asset Management Group.

Michelle Lacey said: “We are delighted to have Bevan join us. Bevan’s appointment demonstrates AXA IM’s commitment to Australian clients as we continue to provide more focus and proximity to our clients in response to their evolving needs. With responsible investment strategies being in high demand, Bevan’s deep industry knowledge and experience, together with AXA IM’s diverse ESG investment solutions, will help clients invest responsibly and achieve their investment goals.

“In this challenging environment, responsible investing has become even more central to our business priorities, with climate change representing our largest area of engagement in 2020. We are seeing growing momentum for more sustainable investments globally. This is evident as AXA IM noted an increase in total FUM to AUD$500 million for the Sustainable Equity Strategy in Australia. Globally, 89% of AXA IM Core’s assets under management are now fully ESG-integrated*.

“Furthermore, AXA IM’s assets under management amounted to AUD$1.364 trillion (€858 billion) globally^[1], up by AUD$90.6 billion (€57 billion) compared to 31 December 2019, reflecting net inflows and positive market effects.”

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[1] Source: AXA Investment Managers, as of 31 December 2020

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Simon O’Connor

Nine in ten Australians expect their assets to be invested responsibly,1 creating an opportunity for financial advisers to implement responsible investment (RI) strategies on behalf of their clients, according to AXA Investment Managers (AXA IM) and the Responsible Investment Association Australasia (RIAA).

To assist advisers in deepening their understanding of RI, RIAA and AXA IM have launched the free Financial Adviser Guide to Responsible Investment.

Simon O’Connor, Chief Executive Officer of RIAA, said the Guide provides advisers with practical ways to incorporate responsible and ethical investment practices into their businesses to better meet client requests.

“The Guide sets out to demystify RI, unscrambling all the jargon, to help advisers move up the learning curve fast so that they can have meaningful conversations with clients on the topic.

“Evidence continues to mount that responsible investments have the potential to deliver stronger risk-adjusted returns for investors. Advisers can no longer afford not to be informed. The good news is that by accessing the Guide – and educational resources from firms like AXA IM – advisers can strengthen their knowledge in this area, to deliver the best advice to clients,” Mr O’Connor said.

The spectrum of responsible investment

The RI universe is vast and covers a range of different investment approaches that all consider more than traditional financial information.

“The challenge for financial advisers is determining what approach aligns best to a client’s individual circumstances and values,” said Michelle Lacey, Head of Wholesale at AXA Investment Managers.

“While more and more people are asking their financial adviser about RI, there’s a degree of mystery surrounding it. RI covers a wide range of approaches, and it’s essential advisers have access to enough information to make informed decisions on responsible investments based on the needs of clients,” Ms Lacey said.

RI can be categorised into a range of strategies, including environmental, social and governance (ESG) integration, negative screening, positive or best-in-class screening, sustainability-themed investing and impact investing. There is no one best approach, and advisers need to select an approach that best matches the client’s needs. For some, this may require ESG integration – which refers to the consideration and analysis of ESG factors as part of the investment decision making process. For others, impact investing strategies may be best suited.

RI now constitutes the majority of the overall investment market in Australia, comprising $866 billion of assets, or around 55.5% of all assets professionally managed in 2017, according to research from RIAA. 2

The Guide will be presented to advisers by representatives from RIAA and AXA IM at a series of seminars in four cities across Australia this week.

Advisers wishing to attend a seminar and obtain a copy of the Guide should contact Michelle Lacey at michelle.lacey@axa-im.com.

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[1] Lonergan Research (prepared for the Responsible Investment Association of Australasia), Responsible Investment, October 2017.
[2] Responsible Investment Association Australasia, Responsible Investment Benchmark Report, 2018 Australia.

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