French boutique Federal Finance Gestion, part of Crédit Mutuel Arkea, has launched the Federal Ethi-Patrimoine fund on 22 February 2017, InvestmentEurope can reveal.
The diversified fund seeks to outperform Eonia +1.80% over a three-year period by investing in stocks and bonds of companies and states applying ESG criteria and ethical values.
The fund, co-managed by Alain Guelennoc and Léovic Lecluze, targets annual volatility below 4%.
The strategy’s stock selection combines three filters:
- a best in class approach that excludes 20% of the firms included in the fund’s investment universe;
- a normative filter excluding companies involved in the production of weapons such as mines and breaking the rules set by the United Nations Global Compact;
- an ethical filter excluding companies that do not match ethical criteria outlined by the Catholic Church (typically businesses involved in gambling, tobacco, sex, abortion,…)
As for the selection of government bonds in the fund, the ethical filter is solely applied. Countries excluded of Federal Finance’s investment process would be those applying death penalty, authorising euthanasia as well as those with a high level of corruption and where the freedom of press does not exist.
The fund will be invested up to 30% in equities while at least 70% of its net assets will go into bond and money market funds.
Investments made in companies either based in emerging markets or non-member countries of the OECD will not exceed 20%. Same limit will be applied to investments in small and mid cap equities.