Franklin Templeton and ClearBridge Investments have announced the launch of a global value equity fund named the FTGF ClearBridge Global Sustainability Improvers Fund.
The Fund marking a significant step towards investing in companies demonstrating notable enhancements in their Environmental, Social, and Governance (ESG) profiles.
Franklin Templeton recognises a distinct market gap and investment potential in companies that are in the earlier stages of adopting and improving their ESG practices. As opposed to merely focusing on companies with already robust ESG profiles, this innovative fund aims to facilitate investments in entities that are on a discernible path towards bettering their sustainability approaches, thereby potentially unlocking new dimensions of shareholder value and contributing to sustainable economic development.
Franklin Templeton, a renowned global investment manager, and its division, ClearBridge Investments, operate with a focus on crafting diversified investment solutions that address the varied needs and sustainability preferences of their clientele. By offering a wide-ranging portfolio that spans from best-in-class funds to impact funds, Franklin Templeton remains at the forefront of providing a plethora of investment alternatives and strategies which specifically align with varying investor sustainability preferences and financial objectives.
The FTGF ClearBridge Global Sustainability Improvers Fund is designed to invest in undervalued companies, specifically those that are actively improving their ESG practices. With a concentrated portfolio of approximately 30-40 equity securities, the fund aspires to generate long-term capital appreciation. Every portfolio holding will be purchased with an ESG improvement thesis and sustainability targets, which will be closely monitored and measured for developmental progression. If companies fail to illustrate expected advancements against the set targets, they will be eliminated from the portfolio.
The fund is categorised as Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) and will initially be available for distribution in select European countries: the UK, Ireland, Italy, and Spain. The investment strategy will be managed by Grace Su and Jean Yu, who are portfolio managers on ClearBridge’s Global Value Equity investment team.
The company affirms that focusing on companies committed to elevating their sustainability profiles, even in sectors often bypassed by traditional ESG strategies, can potentially reduce operating risks for those entities, which in turn, can serve as a catalyst for liberating shareholder value and ensuring sustainable economic growth.
Moreover, by strategically investing in companies in the nascent stages of their ESG journey, the fund facilitates investors to contribute to the transition towards a more sustainable economy while retaining the potential for excess returns.
ClearBridge Investments portfolio manager Grace Su said, “We look for companies that are committed to improving their sustainability profiles over time, and that means looking at sectors that are often overlooked by traditional ESG strategies. Companies that address material ESG weaknesses reduce their operating risk, which can be a catalyst for unlocking shareholder value.”
In addition, Jean Yu, another portfolio manager at ClearBridge Investments, added, “Investors have sought the comfort of sustainability in a narrow range of companies that are already displaying good ESG ratings. We believe one needs to look more broadly, and for investors wanting to participate in the transition towards a more sustainable economy, while retaining the potential for excess returns, this is a compelling strategy.”
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