Morgan Stanley Investment Management has announced the launch of the Morgan Stanley Funds (UK) Global Sustain Fund, following the launch of the Luxembourg vehicle in 2018.
The Global Sustain strategy has attracted investor assets of $700m in under 18 months, demonstrating strong demand for high quality ESG integrated funds. Since inception, the strategy has delivered an annualised return, net of fees, of 16.00% vs MSCI World Index 3.92%.
The Fund offers UK investors the opportunity to invest in a concentrated portfolio of high quality companies that is carbon light, tobacco-free, alcohol free, and free of fossil fuels. Global Sustain offers the same long-term focus on high quality companies and integration of material ESG factors - both threats and opportunities to long-term return on operating capital- as the team's other global equity strategies.
The portfolio also has explicit restrictions against investments in companies that generate significant revenues from industries including tobacco, alcohol, adult entertainment, bulk commodities (coal, iron ore, etc.) and fossil fuels, gas and electrical utilities and gambling.
The International Equity team manages Global Sustain. The International Equity team manages AuM of $47bn across its strategies as of 30 June 2019. This includes $25.5bn in the well-known Global Franchise/Brands strategy.
William Lock, Head of MSIM's International Equity team commented: "In our experience, the best way to compound shareholders' wealth over the long term is by owning very high quality companies with sustainable high returns on operating capital. Today's more uncertain world demands a keen focus on material ESG risks and opportunities as well as active long-term engagement with companies. We have engaged directly with companies on material issues of sustainability and governance for over 20 years. With Global Sustain we offer compounding with a conscience and the integration of material ESG issues while maintaining our commitment to investing only in high quality compounders."
Richard Lockwood, MSIM's Head of Distribution for Northern Europe, commented: "Investor interest in ESG integrated products continues to accelerate. Global Sustain is strong on engagement, light on carbon and built on the International Equity team's expertise in quality investing. The market reception to the strategy since launch last year demonstrates our clients' appetite for a high quality ESG integrated strategy from a proven team. We are delighted to bring this compelling strategy to UK investors."
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