Ilmarinen became a seed investor in a new Low Carbon Fund with 170 million euros
Ilmarinen has become a seed investor in AXA IM’s new mutual fund, the AXA WF US High Yield Low Carbon Bonds Fund, with 170 million euros. The fund is one of the first of its kind globally. The fund’s investment approach is fully ESG integrated and particularly focused on the carbon and water intensity scores of issuers. The investment is part of Ilmarinen’s overall responsible investment strategy.
The aim of the new fund is to invest sustainably, focusing especially on carbon and water intensity aspects. The fund’s target is to have a significant reduction of carbon footprint compared to the benchmark index. Certain sectors harmful for climate have been excluded. In addition, the fund is in line with AXA IM’s Sectoral Exclusion and ESG standards policies, setting limitations to, for example, weapon and tobacco industries.
The fund represents the newest form of responsible investing, as it is in line with EU’s Sustainable Finance Disclosure Regulation (SFDR), that came into effect in March. Being a sustainable investment product, the new fund is aligned to Article 9 of the SFDR.
– The offering of products representing responsible investing is also expanding in Fixed Income. Fund managers have recently launched new ETF products, where ESG issues are integrated to the products. In addition, the product development of active funds is accelerating. This new fund is one of the first of its kind globally. Thus, we wanted to invest as a pioneer in this product, says Harri Vuorinen, Senior Portfolio Manager at Ilmarinen.
The product range for responsible investing is expanding
Responsibility is integrated in all investment activities at Ilmarinen. Being a responsible investor, Ilmarinen takes into consideration the ESG (Environment, Social and Governance) issues in its investment decisions.
During the past years Ilmarinen has significantly increased its investments in ESG ETF funds highlighting sustainability aspects. It has invested altogether 5 billion euros, or 90 percent, of the passive investments in the listed equity portfolio to ESG ETF funds, where climate issues have been taken into account.
Having approximately 53 billion euros of pension funds to manage, Ilmarinen has set a goal to achieve a carbon neutral portfolio by the end of the year 2035.
– We are currently developing our climate strategy further, especially regarding asset class -specific roadmaps. We are happy that more sustainable products are starting to be available also in Fixed Income. These products are lucrative alternatives for an institutional investor, says Karoliina Lindroos, Head of Responsible Investment at Ilmarinen.
Harri Vuorinen, Senior Portfolio Manager, Ilmarinen
email@example.com, +358 50 337 6841
Karoliina Lindroos, Head of Responsible Investment, Ilmarinen
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What employers should know about 2022 earnings-related pension contributions?
The average level of earnings-related pension contributions will rise 0.45 percentage points in 2022. The need for the increase was agreed on earlier when reductions were made to TyEL contributions due to the COVID-19 pandemic. Client bonuses, in turn, will return to their previous level. The pension insurance companies’ application concerning actuarial principles has been sent to the Ministry of Social Affairs and Health for ratification, and the Ministry will confirm the percentages in November.
Asset diversification and zero interest rates
Diversification across asset classes and geographically is mandatory from both risk management’s and returns’ perspectives. Traditional diversification has faced new challenges in the zero interest rate macro environment over the last years. Financial stability regulation also has a profound effect on high-return diversification possibilities in Finland’s pension system.
Ilmarinen’s Interim Report 1 January to 30 June 2021: Return on investments was 8.9 per cent, solvency capital grew to more than EUR 15 billion and customers’ payrolls started to rise
The return on Ilmarinen’s investment portfolio was 8.9% (-2.0%) or EUR 4.7 billion thanks to the strong performance of the equity markets. The market value of investments grew to EUR 57.5 (53.3) billion. The long-term average return on investments was 6.1 per cent. This corresponds to an annual real return of 4.6 per cent.
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