Investment managers from Mediolanum International Funds (MIFL) discuss their latest funds at the recent MedMe event in Dublin and highlight why they have stepped up to tackle climate change. He also discussed Chinese stocks and debt in the context of the country’s changing economic situation.
A European investment firm has launched a range of ESG-focused funds, arguing that tackling human-caused climate change remains an urgent challenge. Separately, he thought about what kind of asset allocation makes sense in China.
Furio Pietribiasi, CEO of Mediolanum International Funds (MIFL), highlighted at the firm’s 25th anniversary event in Dublin this month how it had launched nine ESG-focused funds.
The funds fall under Articles 8 and 9 of the European Sustainable Finance Disclosure Regulation (SFDR). “We wanted to wait until the funds under Articles 8 and 9 of the SFDR were launched and developed strategies that meet the criteria to help companies make the transition,” Pietribias told this news service in an exclusive interview.
“We wanted to offer our clients access to ESG-focused funds and we do this by delegating it to specialists. We are mainly targeting climate change to have a greater impact,” said Christophe Jaubert, investment director at MIFL.
An Allfunds Data Analytics report presented at the event shows the growth of sub-advised funds in the funds industry, with ESG funds driving this growth. MIFL said it had seen a 94 per cent increase in ESG mandates, making it the highest growth in the sector among bank group-owned fund platforms, both on a one-year and three-year basis. See more here.
At the same event, Imna Condé, Head of ESG at MIFL, told this news service that they had a fund focused on ESG in 2018 and to manage it they set up a specific committee in 2022. “We now have nine ESG-focused funds, with two more in the pipeline,” she said. “Climate change is the biggest trend for us and we are trying to align funds with four of the UN Sustainable Development Goals (SDGs), focusing on climate action, gender equality, clean energy and affordable, as well as responsible consumption and production,” added Condé. . “To measure the impact of these changes, we have mapped six main negative impacts (PAI),” continued Condé.
While the ESG trend has had its fair share of bumps along the way – such as “green” funds lagging behind those investing in fossil fuels in 2022, when Russia’s invasion of Ukraine shook markets energy, and the problems of “greenwashing”, the phenomenon seems to retain its momentum. High temperatures in parts of the world in summer, wildfires in southern Europe for example, and other concerns have kept this topic at the top of the political and media agenda. The problem is that reducing carbon emissions has become more politically difficult as the costs of transition coincide with a period of rising inflation.
ESG focused funds
SFDR Section 9 funds include MBB Energy Transition and MBB Future Sustainable Nutrition. “The fund is co-managed by Black Rock and Pictet, who have experience in this theme and also have very different views on how to approach the theme of sustainable nutrition,” Condé said.
The fund aims to provide investors with exposure to the theme of sustainable nutrition and the evolution of a new food system that addresses the unsustainable health, climate and waste issues of the current global food production system.
MIFL highlighted that food systems are responsible for more than a third of global greenhouse gas emissions, with 45 percent of food produced lost or wasted. Yet in 2020, between 720 and 811 million people faced hunger, an increase from 2014. With the global population expected to reach 10 billion by 2050 and the food system accounting for 30 percent of emissions , MIFL said precision agriculture that optimizes crop productivity is a key tool to achieve this. This will, for example, allow farmers to more precisely target their fertilizer application. The adoption of this technology is expected to accelerate in the future.
This news service has recently published a number of articles on how wealth managers are paying more attention to food production and its requirements. Demographic pressures, wars, supply chain disruptions and the impact of new technologies have disrupted the space. See hereAnd here.
Asia-Focused Funds
Moving away from ESG issues, the company also discussed its approach to the Chinese economy.
Jaubert said MIFL has about 70 different funds, balanced between fixed income and equities. The company is neutral in equities and slightly overweight in duration, he added.
Among these funds, the GAMAX Asia Pacific Fund primarily invests in stocks in the Asia-Pacific region, including emerging economies in Asia, such as China. Top holdings include Chinese tech giant Alibaba and Taiwan Semiconductor Manufacturing Company (TSMC), which reported better-than-expected profits in the third quarter of 2023, helped by strong demand for artificial intelligence (AI) chips.
Jaubert told this news service that they also recently launched a Chinese equity fund, which continues to grow, and an Indian equity fund this year, with India being touted as one of the economies to the fastest growing in the world. See more here.
The China fund is co-managed by Steven Lux, CEO of Hong Kong-based Foundation Capital, which focuses on investing in Chinese stocks. Lux believes that robotics, automation, healthcare and renewable energy will shape China’s future. With the country producing more than 70 percent of all photovoltaic solar panels, half of the world’s major electric vehicles and a third of its wind power, it is directly exposed to renewable energy, including solar. He also likes consumer goods, like sportswear, and said the food and beverage sector continues to grow.
Despite concerns over China’s slowing economy, he said it was currently in a downward cycle. “This has been the case before and every time the market has done well,” he told this news service. There are also early signs of improvement in the economy, Lux added.
Latest figures show that China’s GDP growth in the third quarter of 2023 exceeded economists’ expectations, reaching 4.9% year-on-year, putting Beijing’s 5% GDP growth target for 2023 within reach The quarter saw a sharp increase in retail sales, particularly in restaurants, alcohol and cars, offsetting a slowdown in the real estate market. Lux believes it is a good time to invest in Chinese stocks.
MIFL is a management company approved by the Central Bank of Ireland to manage UCITS or undertakings for collective investment in transferable securities, which are investment funds regulated at EU level, and non-UCITS funds.
