​Ilmarinen invests €170m in AXA low-carbon HY bond fund

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Finland’s largest pension insurance company Ilmarinen announced it is investing €170m in a new low-carbon bond fund from AXA Investment Managers (AXA IM), acting as a seed investor for the fund launch.

The Helsinki-based firm said the fund – the AXA WF US high yield low carbon bonds fund – focused particularly on the carbon and water intensity scores of issuers, and functioned according to AXA IM’s ESG standards, setting limits on the weapon and tobacco industries, for example.

Karoliina Lindroos, head of responsible investment at Ilmarinen, said the earnings-related pension provider was happy that more sustainable products were starting to be available in fixed income.

“These products are lucrative alternatives for an institutional investor,” she said.

The pension provider told IPE the fund was a new actively-managed mutual fund.

Ilmarinen said the fund represented the newest form of responsible investing, as it was in line with article nine of the EU’s Sustainable Finance Disclosure Regulation (SFDR), which came into effect in March, as a sustainable investment product. 

Harri Vuorinen, senior portfolio manager at Ilmarinen, said:  “Fund managers have recently launched new ETF products, where ESG issues are integrated to the products.

“Thus, we wanted to invest as a pioneer in this product,” he added.

Over the past years, Ilmarinen said it had significantly increased its investments in sustainability-focussed ESG ETFs, having invested a total of €5bn, or 90% of the passive investments in its listed equity portfolio in such funds.

“Having approximately €53bn of pension funds to manage, Ilmarinen has set a goal to achieve a carbon neutral portfolio by the end of the year 2035,” the pension provider said.

Last summer, Ilmarinen announced it had invested €500m in passive ESG emerging market (EM) equities via a new ETF it co-developed with French asset manager Amundi, investing in over 450 large and medium-sized companies operating in 26 emerging markets.

Earlier this month, Varma, another key provider in the Finland’s earnings-related pension system, announced it had invested €200m in BlackRock’s new US ETF, which overweighted companies seen as better positioned in the switch to a low-carbon economy.