abrdn will not seek an SDR for its MyFolio ranges, but the overall investment objective and risk profiles will largely remain unchanged.
abrdn is in the process of renaming its MyFolio Sustainable and Sustainable index ranges in a bid to comply with the Sustainability Disclosure Requirements’ (SDR) naming and marketing rules.
Ahead of the 2 December deadline, the firm will rebrand the offerings to MyFolio Enhanced ESG and MyFolio Enhanced ESG index, respectively, to provide "clarity" to investors and to reflect the "sustainability characteristics within the products", all without having to use the term ‘sustainable' in the fund name, it explained.
The asset manager said the name change allows it to "retain the core philosophy of the MyFolio range, while still providing investors with access to underlying funds that can demonstrate clear sustainability characteristics", through investment process and enhanced monitoring.
This means abrdn will not seek an SDR label for its MyFolio ranges, it added. The overall investment objective and risk profiles will largely remain unchanged, however.
FCA SDR implementation policy for portfolio management to be delayed to Q2 2025
Justin Jones, senior investment director at abrdn, said: "The MyFolio Enhanced ESG ranges will remain risk targeted, diversified solutions. While we are fully supportive of the FCA's approach to labelling, this particular range of funds does not lend itself to the four labels.
"It was vital to us that we retain the core philosophy and process, employed across the MyFolio family of funds for fourteen years."
Jones reiterated the ranges' focus will remain on building "long-term, diversified portfolios that are calibrated to deliver returns in line with risk".
"We believe in making these changes that we are acting in the best interests of investors in the funds and we look forward to re-engaging with our clients on both Myfolio ranges, which continue to see steady inflows with the Enhanced ESG Index range passing another milestone this month, with AUM hitting £150m," he added.
MSCI ditches ESG label from indices to comply with EU and UK naming rules
Dan Grandage, chief sustainability officer, investments at abrdn, said: "While many have focused attention on SDR's sustainability labels, funds with sustainability characteristics are also important for investors to consider. SDR has set strong standards and requires clarity in disclosures for these funds as well.
"Despite initial indications to the contrary, our expectation is that the market is moving towards a situation where there are higher numbers of products having sustainability characteristics and no label, and a far lower number of products with sustainable labels. Whether this continues out into the future remains to be seen."
abrdn follows in the footsteps of two investment trusts - Premier Miton Global Renewables and Impact Healthcare REIT – which decided to drop sustainability-related terms from their fund names and/or investment objectives in light of the SDR rules.
On the other hand, three asset managers – AEW UK, WHEB Asset Management and Schroders – all confirmed they will adopt the Sustainability Impact label for their respective funds.
