Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Print
October 27, 2008 01:00 AM

SRI assets leap 157% in Europe, study claims

Investments go beyond traditional stocks

Thao Hua
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    European sustainable and responsible investment assets under management climbed to €2.7 trillion ($3.6 trillion) at the end of 2007, a 157% increase from two years earlier, according to a study released earlier this month.

    About 50% of those assets were invested in equities and 39% in bonds, according to the biennial study published by Paris-based European Social Investment Forum, an industry organization with members that include pension funds, asset managers and consultants.

    About 4%, or €56.6 billion, of total SRI assets are invested in real estate, 1.4% in private equity and venture capital, 1.3% in hedge funds and the remainder in commodities. Most of the alternative SRI assets are managed on behalf of Dutch investors, including the €205 billion Stichting Pensioenfonds ABP, Heerlen, and the €88 billion Pensioenfonds Zorg en Welzijn, Zeist, according to the study.

    “One of the biggest changes (in SRI) is that pension funds are moving beyond just investing in equities to all other asset classes,” said Matt Christensen, executive director of Eurosif. “Investors used to only talk about SRI in terms of equities. They're realizing that actually they should be looking at other asset classes — from real estate to fixed income to private equity to hedge funds. This is an acknowledgement that these (SRI) risks do matter, in all areas of investments.”

    Segregated mandates account for about 82% of total SRI assets under management, while another 12% is invested in mutual funds. Structured products, funds of funds and other types of investments account for the remainder. Funds of funds, although still “marginal,” have grown steadily over the past two years and now total about €2.4 billion in assets, according to the study.

    European investors account for about 53% of total global SRI investments, according to the study. The U.S. accounts for 39%, with about $2.7 trillion in SRI assets. The remainder comes mostly from Canada and Australia.

    “I think U.S. pension funds will be shifting into SRI in a big way,” Mr. Christensen said. “SRI management is long-term investment management, and pension funds are long-term investors.”

    Thematic funds — strategies that follow certain environmental, social and governance convictions such as climate change — are a relatively new approach to SRI. Because thematic portfolios focus on ideas in which investors see strong growth potential rather than negative screening of specific companies or industries, the strategies themselves usually allow for a broader opportunity set as well as better diversification, according to the study.

    One early user of thematic funds is Henderson Global Investors Ltd., London. Henderson is expanding into the U.S., with the launch in August of its global SRI thematic strategy for institutional and retail investors, said George Latham, the London-based head of SRI funds.

    Backing off

    Earlier this year, Henderson's portfolio managers reduced the fund's exposure to clean energy as concerns grew over valuations. “We then looked to invest more in health care since that sector would tend to be less impacted by an economic downturn,” Mr. Latham added. “The way we've constructed (the strategy) is very well diversified. ... Year-to-date performance has been relatively strong.”

    Henderson's Industries of the Future Fund returned 3.58% on an annualized basis for the three years ended Sept. 30, compared with 1.02% for the Morgan Stanley Capital International World index, according to data provided by the firm.

    For the 12 months ended Sept. 30, the fund returned -12.79% compared with -14.98% for the index.

    Henderson reported £56.2 billion ($97.2 billion) in assets under management, including £710 million in SRI strategies at the end of June.

    “To a certain extent, the ESG principles that are embraced by the responsible investment community may serve to encourage practices that will help the (broader) market to function better in the long term,” said Danyelle Guyatt, principal in the responsible investment team at Mercer LLC in London. Earlier this year, Mercer expanded its ESG research to include all asset managers on its database.

    The financial turmoil likely will affect SRI strategies, with redemption rates expected to rise, according to the study. However, growth is expected over the next two to three years.

    One key driver for growth in SRI over the past two years is the United Nations Principles of Responsible Investments, which was introduced in 2006 and has been signed by more than 400 institutions responsible for about $15 trillion, according to the study. In the past two years, many pension funds, including ABP, expanded their SRI teams to integrate environmental, social and governance factors into the investment process.

    “An important reason for growth (in SRI mandates) has been the regulatory environment,” Mr. Christensen said.

    As of January 2008, certain occupational pension fund sponsors in Italy are required to disclose how they're taking ESG factors into account in their investment strategies Spain is considering similar measures, according to the study.

    Pension systems in the U.K., France, Germany, Sweden, Belgium, Norway and Austria already follow at least some SRI-related regulations.

    The study was conducted from April to June using year-end 2007 data.

    Contact Thao Hua at [email protected]

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    Morningstar Indexes' Annual ESG Risk/Return Analysis
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing