Factor-based investment pioneer Dimensional Fund Advisors (DFA) has released further detail on its new emerging markets sustainable fund for Australasian investors.
As reported earlier in July, DFA had slated the launch of the Emerging Markets Sustainability Trust this month while also enhancing the environmental, social and governance (ESG) flavour of a fixed income offer.
In a release last week, DFA says the new fund is one of the first available to Australian and NZ investors to apply ESG elements to emerging markets.
Glenn Crane, DFA Australia chief, said the emerging markets fund extends the group’s sustainability product range that primarily aim to cut exposure to greenhouse gas emissions.
“Many of our clients want transparent, effective investment solutions that focus on climate change in a measurable way,” Crane said in the statement. “With many emerging markets having higher emissions than developed markets, this means clients can have a meaningful impact across their total portfolio.”
The new fund will have exposure to over 1,000 securities across 24 jurisdictions that account for about 13 per cent of global stock market capitalisations and roughly a third of the world economy.
In addition to reducing portfolio exposure to carbon emissions, the DFA emerging markets sustainable strategy will also filter stocks based on other ESG issues as “land use, biodiversity, toxic spills, and palm oil… child labour, cluster munitions, tobacco and factory farming”, the release says.
According to the product disclosure statement, the DFA emerging markets fund comes with a 0.6 per cent annual management charge plus a contribution and withdrawal fee arrangement. Direct investors in the DFA fund face a contribution fee of between A$20 to A$27.50 for each initial investment (of a minimum A$25,000) and the same charge again for all further contributions of A$5,000 increments: all withdrawals also trigger fees of the same level. However, the fixed dollar withdrawal and contribution fees don’t apply to investors accessing the fund via platforms or third-party providers like KiwiSaver schemes that negotiate wholesale pricing.
The DFA sustainability product range also covers developed market world shares, Australian equities and global bonds – available as separate funds or blended in a 70/30 balanced fund vehicle.
DFA manages about A$800 billion globally including A$45 billion sourced from Australian and NZ investors.
Also last week, the fast-growing sustainability-focused Pathfinder KiwiSaver topped up its private equity holdings with a $200,000 investment in novel NZ medical bandage company, Wool+Aid.
Pathfinder, which reported about $75 million in its KiwiSaver scheme at the end of March, participated along with other investors in the Wool+Aid $1.5 million capital-raise.
Paul Brownsey, Pathfinder head of investment, said in a statement that the “$200,000 investment is only a small part of Pathfinder’s funds, which reflects both the higher risk – and huge potential upside – of early-stage investing”.
“The Wool+Aid product is unique and a potential game changer in its category,” Brownsey said. “It is a sustainable product in a multi-billion dollar global market, which is definitely worth investing in.”
John Berry, Pathfinder chief, said KiwiSaver providers were turning more to private equity and venture capital investments in efforts to capture higher long-term returns.
But Berry said “we believe a large number of Kiwis want KiwiSaver investments at the intersection of what’s good for the planet as well as what makes good financial returns”.
Pathfinder KiwiSaver has also taken small private equity stakes in NZ firms such as the mental health app Mentemia, solar energy firm Lodestone and Sharesies while investing in bond issues by community-housing collective Community Finance and the South-East Asian Women’s Livelihood Bond.