WTW’s defined contribution (DC) master trust, LifeSight, has committed £400m to seed a new global core credit fund targeting carbon transition, launched by AXA Investment Managers (AXA IM). The investment is expected to rise to £1bn by 2027.
The AXA Carbon Transition Global Core Credit Fund aims to provide pension investors with broad exposure to global credit markets while applying a formal decarbonisation objective, targeting long-term income and capital growth.
AXA IM told IPE the fund is open to all institutional investors, including other UK master trusts, single-employer trusts, corporate defined benefit pension funds and Local Government Pension Schemes (LGPS).
Andrew Doyle, lead investment adviser to LifeSight, said the allocation would be used within its default strategy for members in the later stages of accumulation and decumulation.
“It will help manage risk for these individuals during these important stages by providing valuable geographic diversification and by incorporating climate risk,” Doyle said.
AXA IM stated that the fund reflects growing demand from large DC schemes for credit strategies that combine risk management, income generation and sustainability objectives.
The fund will invest in issuers that either have a credible plan to reach net zero carbon emissions by 2050 or are actively reducing their carbon intensity in line with that goal.
Lionel Pernias, head of fixed income investment solutions at AXA IM, said: “Working with LifeSight to launch a carbon transition credit product showcases AXA IM’s continued innovation in the DC pensions and sustainability space.”
The strategy has adopted the UK’s Sustainability Disclosure Requirements (SDR) “Improvers” label, making it the fifth fund in AXA IM’s range to fall under this category.
Herschel Pant, head of global consultants and UK institutional at AXA IM, added: “Our range of building blocks for DC clients in the later stages of accumulation and decumulation continues to grow, with clients invested across buy-and-maintain, short-duration credit and equity protection strategies. All of these have been developed with DC investors, and we look forward to working closely with our clients as their needs evolve over time.”
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