In this series for ESG Clarity Asia, Morningstar dives into ESG funds available in Asia, analysing their investments, performance and ESG credentials.
For this latest article, Morningstar’s Matias Möttölä takes a look at the BlackRock Global Funds-ESG Multi-Asset Fund.
After being repurposed into an ESG fund in 2019, BlackRock’s ESG Multi-Asset has seen strong asset growth. At $7.2bn of assets under management at the end of April, it is among the largest ESG-focused allocation funds on the Ucits market.
The benchmark-aware process is solid, but it’s still early to grow conviction in the approach as it continues to evolve.
The fund is managed within the London-based Diversified Strategies Group – but is available in Singapore – with Jason Byrom and Conan McKenzie as lead managers since May 2018. They are supported by a nine-strong team of researchers, including ESG specialists, as well as a small team for implementation and trading support. Beyond the immediate team, the managers can also seek inputs across the extensive organisation at BlackRock.
The team’s concern for sustainability shows in the portfolio, as demonstrated by the its Morningstar sustainability rating of five globes out of five. In the European Union’s SFDR classification the fund is classified as Article 8.
The portfolio includes many kinds of ESG investments: within its equity and bond sleeves, the team uses actively managed BlackRock portfolios with a sustainability focus. The team also creates thematic baskets than often have an ESG angle. For passive exposures the team tends to prefer ETFs based on SRI indexes. And in its alternative sleeve the team looks for closed-ended funds into businesses with a sustainability impact such as renewable energy or social housing.
Its 13.9% involvement in carbon solutions in higher than the 10.7% average involvement of its peers in the Eur Moderate Allocation – Global category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation and so on. The fund aims to avoid or minimize holdings in companies breading international norms, including the UN Global Compact or the Universal Declaration of Human Rights.
Allocation-wise the team doesn’t want to sway too far from its 50% developed-markets equity/50% global bonds risk index; at the end of April the fund was invested 51.9% in equities. Instead, to express their views the managers use intra-asset-class weightings to differentiate the fund from the market benchmark. The sovereigns-heavy fixed income portfolio serves mostly as ballast, although the fund has recently broadened an ESG-themed credit portfolio to a 9% weight.
BlackRock fund made big gains from Covid
