Franklin Templeton has launched a new emerging markets fund under portfolio managers Chetan Sehgal and Andrew Ness, with a focus on sustainability.
A sub-fund of the Luxembourg-domiciled Franklin Templeton Investments Funds range, Templeton Emerging Markets Sustainability will invest in a portfolio of 30 to 50 emerging market companies demonstrating good or improving sustainability criteria.
With the support for the wider Franklin Templeton emerging markets equity team, the fund will target capital appreciation through stocks whose products and services are aligned to one or more of the six positive outcome areas linked to the UN Sustainable Development Goals (SDGs).
The fund will also apply specific ESG exclusions, and will not invest in companies involved in weapons, tobacco, coal and unconventional oil and gas extraction, or whose actions have violated the United Nations Global Compact.
It will have a five-year investment horizon for each investee company, which will be analysed to meet the criteria of a three-pillar ESG inclusion framework; alignment to positive environmental or social goals, "intentionality" to maintain its ESG footprint, and "transition potential" for improvement through engagement.
Initially only available to European investors, Templeton Emerging Markets Sustainability will be available to UK retail investors pending Financial Conduct Authority registration. The ongoing charge ratio for the W (acc) GBP share class is 1.1%.
Co-manager Ness said: "Our rigorous and holistic three-pillar ESG inclusion framework means that, as well as companies that demonstrate good sustainability criteria, we can invest in companies that may be imperfect and create investor impact by pro-actively engaging with these companies to improve.
"We believe that our core role as stewards of our clients' capital is to engage in its responsible allocation, management and oversight to create long-term value for our investors."
Global head of ESG at Franklin Templeton Julie Moret added: "Our philosophical focus is on positive and improving sustainability inclusion. The fund adopts a proprietary framework that reflects key emerging market megatrends such as demographic shifts, urbanisation and technological innovations, which open up new opportunities from improving awareness of sustainability issues in emerging countries."