The Luxembourg Public Entity, Fonds de Compensation Commun au regime general de pension (FDC), has selected MFS Investment Management to manage an active emerging market (EM) equity mandate with a sustainable approach worth €600m, on behalf of its SICAV.
The selected strategy, MFS Blended Research Emerging Markets Equity is a diversified, actively managed strategy that uses a consistent, disciplined, bottom‐up stock selection and portfolio construction process that blends fundamental and quantitative research.
It seeks to invest in above‐average-quality companies that are trading at favourable valuations, with an investment catalyst that may be rewarded over the long term, MFS said in a statement.
The strategy’s goal is to outperform the MSCI Emerging Markets index with a controlled tracking error over a full market cycle. The strategy has been available to institutional investors since 2011.
Natasha van der Linde, director, institutional sales, Benelux, at MFS, said: “MFS was able to deliver on FDC’s sustainability criteria for this mandate by utilising its existing deeply integrated approach to long-term sustainable investment and focus on outcome-based stewardship.”
She said this included the criterion that underlying companies must have long-term targets relating to real-economy carbon emissions reductions aligned to the goals of the Paris Agreement.
In addition, MFS will customise the mandate to apply the FDC’s exclusions list — which includes companies that violate the UN Global Compact, and companies that may derive revenue from controversial weapons, she added.
“At MFS, sustainable investing encompasses the integration of ESG factors into our investment process, as well as active ownership through proxy voting and engagement. We believe this approach has the potential to drive more meaningful change than exclusions or screens,” van der Linde noted.
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