M&G launches new sustainable fund which will hold 30 to 40 stocks focused on social diversity and inclusion
- M&G has launched a new fund focused on addressing social inequality
- Diversity and Inclusion Fund will be managed by Thembeka Stemela Dagbo
- It is aiming to provide a higher return than the MSCI flagship global equity fund
M&G has launched a new fund focused on addressing social inequality, notably gender and ethnic diversity, as it expands its range of sustainable funds.
The M&G (Lux) Diversity and Inclusion Fund will be managed by Thembeka Stemela Dagbo and will have a portfolio of between 30 and 40 stocks.
At least 15 per cent of the portfolio will be invested in companies focused on social inclusion, using M&G’s existing Positive Impact and Climate Solution approach and process.
Thembeka Stemela Dagbo will lead M&G’s new Diversity and Inclusion Fund
It will assess stocks using its ‘III’ framework, assessing the investment, intention and impact of each company.
The rest of the fund will be allocated to sustainable companies demonstrating gender and ethnic diversity.
All stocks in this section of the portfolio must have a minimum of 30 per cent women and/or ethnic minorities at board level at the time of purchase.
‘Left unaddressed, the exclusion of disadvantaged groups and the lack of diversity can be costly and result in lost GDP and human capital wealth, whereas pioneers of the diversity and inclusion initiatives are being increasingly recognised for their financial outperformance,’ said Stemela Dagbo.
She is aiming to provide a higher total return than the MSCI’s flagship global equity fund over any five-year period.
‘Companies with top quartile levels of gender diversity are 25 per cent more likely to outperform, and 36 per cent more likely for ethnically diverse ones,’ added Stemela Dagbo.
‘This fund provides our customers with the opportunity to capitalise on these trends and address diversity imbalances while putting their savings to work with a purpose.’
The fund, like M&G’s other sustainable funds, will follow the UN sustainable development goals framework focusing on quality education, gender equality, decent work and economic growth, industry, innovation and infrastructure, reduced inequalities and peace, justice and strong institutions.
The investment manager is one of the leaders in the sustainability investment space which has become an increasingly popular investment theme.
‘[M&G’s new fund] is precisely the sort of innovation and development that we are consistently calling for,’ said David Macdonald, founder of ethical financial advice firm The Path.
‘As the market matures and as consumers are heard then a deeper and wider universe of funds addressing more granular themes can emerge.
‘Diversity and inclusion are critical targets for impact investment which Path Financial has firmly in our sights as an agenda to push forward.
‘The M&G fund is a big stride in the right direction. Ultimately we will want to see more funds such as this with bolder targets.
‘But at this stage, we can’t let “best” get in the way of “better” and it is a very welcome advance.’