The investment firm Thornburg Investment Management recently launched the Thornburg Better World International Fund. The primary investment objective is obviously to earn money for its clients, and the Fund plans to earn solid returns by investing in high-quality companies whose goals are to make a positive impact on the world.
Thornburg CEO and CIO, Brian McMahon, stated that, “The Better World International Fund is a natural extension of our culture of caring and community commitment since our founding in 1982. At Thornburg, we recognize the growing demand for environmental, social, and governance (ESG) investing disciplines, and our new offering enjoys the support of our entire investment team to find opportunities that make positive ESG impacts while still focusing on competitive financial returns.”
The Thornburg Better World International Fund is managed by Rolf Kelly.
The Fund pursues investment opportunities that focus on improving the planet. The evaluation of a company’s sustainability can include its environmental impact, its level of “carbon footprint” left behind by its operations, diversity of its senior management, relationships with communities, the safety of its products, workplace safety, labor and employee practices and regulatory compliance, among others.
Kelly stated that, “The new Fund offers an edge within the ESG space by applying our distinct sustainable investing approach, which integrates ESG into our traditional global generalist research structure. We believe companies with a high degree of sustainability, or with signs of improvement along these lines, are better positioned to outperform in the long run.” Kelly further added that, “We expect investors in the Better World International Fund will share a mindset and desire to achieve long-term outperformance within the parameters of our ESG and sustainable investing research.”
However, there are some catches if you wish to invest in the Fund. For example, if you have less than $2.5 million to invest, the Fund will charge you an upfront fee of up to 4.5% and an annual expense fee of up to 1.83%.
The Thornburg Fund is just one example of this type of ESG fund. Large and reputable investment firms are rushing to get in the game of “sustainable investing,” known as SRI (socially responsible investing) and ESG (environment, social, and corporate governance). The number of firms rushing to invest in SRI and ESG funds has dramatically increased in recent years.
Kathy Leonard, a veteran of sustainable investing and wealth adviser at UBS Financial Services noted that, “The driver is client demand. We need to have the products and services that our clients are asking for.”
Moreover, as Leonard points out, “We’ve got a terminology problem.” Terms such as ESG, SRI, impact, and sustainable can have different definitions according to different people.
“ESG integration” is one example. A growing number of fund managers pledge to fold ESG factors into the investment mix. But, ESG is just one factor considered. Investors may still end up owning defense, fossil fuel, or tobacco stocks that they thought they were avoiding.