IFM Investors has launched a climate transition fund for Australian-listed equities.
The firm had created a climate-enhanced index to help institutional investors meet their net-zero aims and reduce their carbon emissions exposure.
IFM said it expected the pooled fund to have broad appeal among investors seeking to decarbonise their Australian equities portfolios and reduce climate risk, without taking on significant tracking error and fees.
IFM would take into account companies’ transition capabilities and risks as well as engaging with companies that were assessed to have high transition risk. It could also invest in businesses that could help to facilitate a faster transition to net zero, but which were outside of the ASX 300.
In addition to its climate credentials, the fund provided a low-risk strategy for institutional investors that benchmarked the ASX 300 and aimed to align with the Your Future, Your Super performance requirements.
An industry super fund had already seeded the fund, IFM said.
IFM Investors executive director, index and quantitative equities, Laurence Irlicht, said: “Investors shouldn’t have to choose between their tracking error budgets and climate objectives. Our climate transition fund demonstrates that a modest amount of tracking error can drive a reduction in carbon exposure over time and help direct capital towards companies developing climate solutions.”
“We created the climate transition fund to help institutional investors – such as super funds and endowment groups - reduce their carbon exposure while still ticking the right boxes in terms of risk, fees and performance.”