BNY Mellon unveils sustainable emerging markets fund

According to BNY Mellon, the fund may also invest in companies where the team sees the possibility to promote sustainable practices through engagement and advocacy

BNY Mellon Investment Management has unveiled the Sustainable Global Emerging Markets fund targeting companies that are ‘proactively’ seeking to manage social and environmental factors while generating sustained returns.

The fund, managed by Netwon's emerging market portfolio managers Ian Smith and Paul Birchenough, marks the eighth sustainable strategy launch from Newton available to UK investors.

Using Newton's own sustainable investment approach, the fund will seek opportunities such as solutions providers tackling ‘pressing’ social and environmental needs, as well as best-in-class operators and companies said to be committed to investing in and positively adapting to future environmental and social needs.

According to BNY Mellon, the fund may also invest in companies where the team sees the possibility to promote sustainable practices through engagement and advocacy.

The firm highlighted that the fund will not invest in companies that have material ESG issues intrinsic to their business models, including firms that derive a material portion of their revenues from areas such as tobacco.

Portfolio managers Smith and Birchenough said: Lower- and middle-income countries represent over 80% of the global population, and an even higher proportion of the younger population.

It is thought that roughly two-thirds of the $5-7trn annual investment required to meet the UN Sustainable Development Goals by 2030 will need to be deployed in the developing world. Yet emerging markets represent little more than 10% of global equity indices, they said.

They added: The data consistently demonstrates under-served needs and under-representation. It also speaks to significant opportunity to ride with the tailwinds around rising real incomes and urbanisation, as well as the adoption of technologies around clean energy, electrification, digitisation and healthcare.

BNY Mellon IM's head of UK intermediary distribution Michael Beveridge highlighted the ongoing high demand for sustainable solutions, arguing that there are currently very few equity products focusing on sustainable opportunities in emerging markets.

He said: With Newton's proven track record in global emerging markets and longstanding expertise in responsible investing, the fund aims to provide investors with a sustainable emerging markets equity product that provides long-term capital growth while adhering to sustainability criteria.