ClearBridge announces ESG slant equity fund

The global equity manager has launched a new fund in the Australian market, providing exposure to companies that it believes are “committed to change”.

ClearBridge Investments has launched the ClearBridge Global Value Improvers Fund to Australian investors.

Namely, the fund provides exposure to companies considered by ClearBridge to be undervalued and those that are improving on certain ClearBridge ESG measures.

This, the firm clarified, can qualify as companies either transforming their own products and services or enabling other entities to advance ESG objectives.

“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,” portfolio manager Grace Su said.

Matt Bushby, head of APAC business development, added that the ClearBridge Global Value Improvers Fund offers the combination of global value investing coupled with a “forward-looking” approach to ESG improvements.

“We believe this approach provides advantages against value’s more cyclical nature and creates a disciplined framework for a concentrated, high-alpha generating portfolio,” Bushby said.

Expounding on the fund’s strategy, Su noted that it invests in 30 to 40 securities across developed and emerging markets with a focus on three main “improvers”: enablers, reformers, and promoters.

According to ClearBridge, enablers qualify as companies that help their customers or industries achieve ESG goals, such as those whose products enable greater energy efficiency and lower natural resource use.

“Reformers are your former bad actors with a willingness and a plan to transition. For example, these could be energy companies that are on a path to adopting renewables, or traditional car companies transitioning from internal combustion engines to electric vehicles,” Su said.

The third category – promoters – include companies whose products or services have a direct impact on furthering the United Nations Sustainable Development Goals.

“Healthcare companies that improve outcomes, increase access to care and democratise healthcare are good examples of promoters, as are financial companies that use their loan books to advance sustainable financing.”

Su continued: “In recent months, political risk and policy uncertainty have become increasing overhangs on equity markets and we expect this to continue”.

“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.”

In April, ClearBridge unveiled its inaugural global equity strategy designed specifically for Australian investors, introducing the ClearBridge Global Growth Fund.

At the time, Bushby confirmed that the equity manager would be looking at potential opportunities to launch other global equity strategies in the future.