Natixis is a multinational corporate and investment bank based in France. They specialize in wealth and asset management and corporate/investment banking. They claim that “green finance is the cornerstone of their engagement.” One of the company’s funds is the Sustainable Future 2030 Fund, aimed to dial down risk as an investor nears retirement. ESG considerations play a key role in selecting long-term returns. The fund has a 5 out of 5 according to Yahoo Finance’s Portfolio Sustainability Score. This score is a summary of a company’s ESG scores with deductions for ESG controversies involved with the company. While this rating is used to examine if a company is acting sustainably, I think it is important to also take into account what more the company can be doing given their resources.
As of February 1, 2022, NSFFX’S total net assets equal to around $15.40 million, with a daily NAV of $12.34 and a holding turnover of 69.00 %. Some of the top holdings of the fund include the Mirova Global Green Bond Fund for fixed income (6.90 %), iShares ESG Aware MSCI ETF (6.15 %), and individual securities such as Facebook Inc and Nvidia. The top 10 holdings in terms of percent of assets make up 41.79 % of the sustainable fund’s portfolio. The sector weighting’s include technology (18.20 %), financial services (18.95 %), industrials (12.96 %), healthcare (12.87 %), and consumer cyclical (11.96 %). Overall, it is positive to see that the top 3 holdings of the fund are focused on ESG measures. However, many other investors don’t seem to be focused on dealing with climate change and environmental issues. These include Amazon, which is a corporation criticized for working with big oil, and other fossil fuel investments making up about 4.2 % of Natixis’s investments. This suggests that the small fund still has areas to improve in before being able to make a big difference in the sustainability world.
I think the fund has a very effective process when it comes to ensuring that it supports ESG. The fund’s glide path is adjusted to balance the appropriate levels of risk and reward throughout the investor’s lifetime with each fund managed to and through a specific target retirement date.
The fund’s allocations are carefully constructed and are well diversified across multiple dimensions including investment styles within asset classes, active and passive strategies, and approaches to incorporating ESG considerations. In selecting managers to include in the funds, the team aims to prioritize managers that incorporate ESG considerations in decision-making processes in an effort to drive better financial outcomes. This is very important, as the people leading the funds need to be concerned with environmental impact if the fund is to be effective in reaching sustainability, and I think Natixis definitely wants to achieve that from their funding methods. Consistent with the funds’ multi-disciplinary structure, each of the managers selected for the funds may consider ESG factors differently and may implement differing approaches to incorporating ESG considerations. The team continually executes and manages change throughout the entire investment process. One look at Natixis’s Green and Sustainable Hub page shows the efforts they are making towards ESG compliance, even if it is not necessarily part of the Sustainable Future 2030 Fund. They show Green and Sustainable securitization of financing, ESG indices, and green bonds. Though many of these programs and solutions are not part of the Future Funds directly, it is reassuring to see that the company has various programs, departments, and reports regarding sustainable finance, including a wide team with a background in sustainable finance.
According to Natixis’s website, there are four management advisors. First is Christopher Sharpe, the Chief Investment Officer and Lead Portfolio Manager of Natixis Sustainable Future Funds. He began his investing career in 1990 and joined Natixis’s fund in 2019. Although his fund management experience is high, he doesn’t seem to have previous experience regarding sustainability or renewables.
Other Natixis advisors include Marina Gross (Co-head), Curt Overway (Co-head), and Daniel Price (CIO). All have experience in financial investing since the late 1990s, but do not have any background or experience in sustainability or ESG. The Natixis Sustainable Future Funds were designed to consider ESG risks and opportunities in coming years, but the lack of focus towards targeting these environmental sectors seems to hold back the potential of the sustainable fund. After all, the fund has to invest in funds run by Natixis’s affiliates. The fund could benefit from having a team with a stronger background in ESG or sustainability.