ClearBridge launches new ESG fund

ClearBridge Investments has launched the Global Value Improvers Fund, which aims to provide exposure to undervalued companies and those that are currently improving on ESG measures.

This comes after ClearBridge launched its first global equity option earlier this year.

ClearBridge portfolio manager Grace Su said the fund invests in 30 to 40 securities across developed and emerging markets; the judgement of these investments is based on three core pillars of Enablers, Reformers, and Promoters.

"We are focused on companies that we believe are committed to change. We think there's a lot of opportunity in companies the market doesn't classify as ESG friendly or which have not had their success in incremental ESG achievement recognised," Su said.

Enablers are companies characterised with significant ESG success with their customers or industries, while Reformers stand for "former bad actors" with a willingness to transition to greener solutions.

Entities contributing direct impact on furthering the United Nations Sustainable Development Goals through their products and services are considered Promoters.

ClearBridge said the introduction of the fund allows Australian investors to opt for ESG-focused companies. Su said the fund can help investors diversify their equity portfolios to mitigate risk from "heightened volatility" in the market.

"In recent months, political risk and policy uncertainty have become increasing overhangs on equity markets and we expect this to continue," Su said.

"Overall, periods of heightened volatility remind us of the importance of portfolio diversification and the benefit of having longer term investment themes, such as energy transition and governance reform, which are less tied to the economic cycle and thus lend stability during extreme market movements."

The announcement comes at a low tide for ESG funds, according to a recent study from Preqin.

According to its Alternatives in APAC 2024 report, ESG funds have struggled to raise capital, with APAC ESG funds taking the most significant blow, dropping 77% in aggregate capital raised last year.

The rate of ESG funds closed in 2023 is, however, declining.