Natixis launching 401(k) market's first ESG-focused target-date mutual funds

The funds seek to capitalize on the growing popularity of environmental, social and corporate governance investing, and help diversify in an increasingly competitive TDF market

Dec 16, 2016 @ 11:13 am

By Greg Iacurci

Natixis Global Asset Management is seeking to be the first asset manager to launch target-date mutual funds focusing on environmental, social and corporate governance causes, hoping to capitalize on broader momentum for ESG investing and recent regulatory guidance making it more palatable for 401(k) plan sponsors.

Portfolio managers for the funds, the Natixis Sustainable Future Funds, will select securities based on issues such as “fair labor, anti-corruption, human rights, fair business practices and mitigation of environmental impact, seeking a diversified portfolio of investments that contribute to a more sustainable future,” according to a Dec. 15 filing with the Securities and Exchange Commission.

The company's push into a previously unoccupied target-date niche is further proof of asset managers' strategy of diversification to stand out in an increasingly competitive, and lucrative, defined-contribution market. The funds represent Natixis' first offering in the nearly $900 billion target-date mutual fund market.

The Labor Department last year issued guidance meant to boost retirement-plan fiduciaries' consideration of ESG funds in their 401(k) plans. That guidance acknowledged fiduciaries can proactively use ESG factors when selecting investments, as long as they also focus on an investment's economic merits.

The product also comes as socially responsible investing grows more popular, especially among younger investors and women. U.S. domiciled ESG assets under management have grown more than 30% since 2014, to nearly $9 trillion, according to the Forum for Sustainable and Responsible Investment.

Morningstar Inc. this year launched an ESG scoring system for investors and advisers so they can judge the overall impact of a fund's holdings.

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