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March 26, 2022

abrdn's Multi-Asset Climate Solution Fund re-assessed

This climate-focused fund, from global asset manager abrdn, has undergone its annual reassessment and retains a prized gold medal.

Every year The Big Exchange re-assess funds for their positive impact on people and the planet. The fund manager has to prove that the fund is continuing to walk the talk. We regularly update our assessment and will award new medal ratings for every fund. Every fund re-assessment gets an update for you to find out more.

ASI Multi-Asset Climate Solutions Fund impact assessment

This climate-focused fund, from global asset manager abrdn, has undergone its annual reassessment and retains a prized gold medal. The firm devotes significant resources to stewardship activities and engages with companies on ESG (Environmental, Social & Governance) issues. 

However, engagement is not the main way this fund aims to deliver positive sustainability outcomes. The key focus is instead on finding those companies which directly contribute to tackling the climate emergency we face today. As a result, an impressive 87% of the portfolio is invested in such positive solutions.1

The Fund was launched in partnership with The Big Issue Group (TBIG), co-founder of The Big Exchange. It benefits from guidance from the Climate Advisory Group which consists of abrdn, TBIG and external experts who review the investment approach. You might like to know that abrdn has committed to sharing 20% of the net revenue generated by the Fund to support TBIG’s social causes.

A multi-asset approach helping the world towards Net Zero  

The fund aims to grow your money over the long term (5 years or more) by investing in a portfolio of equities (company shares) and corporate bonds (loans to companies) issued by companies whose core business is products and services that enable the transition to a low carbon economy. 

This includes exposure to property REITs (Real Estate Investment Trusts) and renewable energy infrastructure investment trusts (types of funds which are listed on the stock market). By diversifying risk across different asset classes, investment returns have the potential to be less volatile than a pure equity fund (meaning the ups and downs may be[LR1]  less extreme). 

Process and implementation

The themes targeted are reviewed regularly by the Climate Advisory Group to ensure the fund is finding opportunities that are driving the global energy transition. Individual holdings are selected primarily by using positive screening criteria to identify companies whose core activities help to alleviate the effects of climate change and other forms of environmental harm. 

The fund currently invests in renewable energy (such as wind turbines, solar panels), electric vehicles and battery technologies, pollution control, energy efficiency, green buildings, and sustainable agriculture and land use. Demand in these sectors is expected to grow rapidly as the world accelerates its move towards net zero carbon emissions. 

The fund is still relatively new, so the level of engagement and reporting is not as well as developed as with its longer established peers. Consequently, it scores 1 out 3 for positive influence (largely carried out at the firm level) and 2 out of 3 for transparency.1 An impact report is in production and each holding has been verified internally in terms of the proportion of green revenues it generates but this evidence was not submitted for our assessment. We expect these scores to improve by the next assessment.  

Portfolio - what's under the bonnet?

The fund is very well diversified, with 149 holdings. It has 26% of the portfolio in US equities, 19% in European equities and 16% in UK equities. Overseas bonds account for a further 13% of the fund.2

The funds maps most closely to SDG 6 (Clean Water & Sanitation), SDG 7 (Affordable & Clean Energy) and SDG 12 (Responsible Consumption & Production). These represent 15%, 38% and 13% of the portfolio respectively.1

We consider this multi asset approach offers a good way for investors looking to get exposure to climate solutions without incurring the potential risks of a very concentrated portfolio. 

Impact stock example: Encavis

This is where we take a company that the fund invests in and tell you more about what it does to show you how your money can count for more.

Encavis is a leading European producer of electricity from renewable energy sources. The company acquires and operates solar power plants and (onshore) wind farms which are an important source of safe and clean energy. For example, the output of its photovoltaic (solar) plants replaces the capacity of a large coal-fired power plant. 

The market for renewables is growing strongly as breakthroughs in battery storage technology make it well placed to become the dominant energy system of the future. It often benefits from long-term, state-guaranteed tariffs, or power purchase agreements, but is becoming increasingly competitive without these.

Sources

1. TBE Impact Assessment January 2022 

2. Source Factsheet 28 February 2022 

Please remember that when investing, making money is not guaranteed and your capital is at risk. The value of your fund can go down as well as up. Tax treatment depends on an individual’s circumstances and may be subject to change. 

The Big Exchange (TBF) Limited is a wholly owned subsidiary of The Big Exchange Limited. The Big Exchange (TBF) Limited is an Appointed Representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 574048). (6833)


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