04 October 2017
Reporter: Theo Andrew

Northern Trust AM launches two ESG index funds

Northern Trust Asset Management (AM) is launching two environmental, social and governance (ESG) funds, enabling investors to incorporate ESG principles into their portfolios.

The Northern Trust World ESG Leaders Equity Index Fund and the Northern Trust Emerging Markets ESG Leaders Equity Index Fund will be managed by the MSCI ESG Leaders indices, and will enable investment into companies setting the standard in ESG criteria.

The MSCI World ESG Leaders Index comprises best-in-class and mid-cap companies in 23 developed markets, while the MSCI Emerging Markets ESG Leaders Index will consider similar companies in 24 emerging market countries.

The two funds will be the first in Europe to track the MSCI Leaders indices, in addition to a fund already available to US investors.

Factors including “involvement in controversial weapons, alcohol or tobacco” will be rated against ESG principles such as “human rights, rights of employees and consideration for recycling and renewable energy”, a company statement said.

According to Northern Trust AM, its current range of ESG Undertakings for the Collective Investment of Transferable Securities funds are valued at $10.5 billion, as of 31 August 2017.

Hazel McNeilage, managing director for Northern Trust Asset Management in Europe, the Middle East and Africa, said: “We see an increasing interest from passive investors in Europe to take their ESG investing a step further with best-in-class solutions and we believe these funds offer a compelling solution.”

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