Provider of sustainable investments
Innovation gets a helping hand from us: private investors can help shape the future with MEAG’s sustainability fund.
Sustainable investments are becoming more and more significant. Many investors are looking for more than just a good return and safety – they want to use their money to shape the future on the basis of ecological and social criteria. For some time now, such investments have not just been for idealists. Indeed, studies have shown that, for the same forecast return, sustainable investments have a lower level of risk.
Not surprisingly then, sustainable investments have developed into a huge growth market. According to Eurosif (the European Social Investment Forum), in the last three years "eco-funds" have experienced a growth rate double that of the conventional fund market. The recently published reports of the Intergovernmental Panel on Climate Change will heighten people’s awareness and provide additional impetus for sustainable investments.
MEAG, the Munich Re Group’s asset manager, recognised the growing interest at an early stage and launched the "MEAG Nachhaltigkeit" equity fund in October 2003. This is the first of MEAG’s retail funds to both apply a conventional rigorous investment process and take account of sustainability criteria. Standard and Poor's and Morning Star first rated the fund at the end of 2006 and awarded it four stars out of a possible five.
The fund is primarily invested in shares that feature in the Dow Jones Sustainability World Index (DJSI World). This index, which includes Munich Re, comprises the top 10% of 2,500 major companies worldwide chosen for the particularly responsible way in which they conduct their business, as evidenced by their environmentally friendly and social behaviour. Companies involved in the tobacco, alcoholic beverages, armament and weapons industries are excluded. And given that the fund aims to achieve a high level of growth, financial performance is also a criterion for selection.
Apart from well-established shares, MEAG invests 10 to 20% of the fund in innovative niche players committed to the great challenges of our time, such as the search for sustainable ways of generating power from water, wind, the sun and biomass. The fund is open only to innovative companies able to provide evidence of their sustainability strategy and the sustainability of their innovations – for example producers of wind or hydroelectric power plants with growth opportunities in a forward-looking market.
To select companies for investment, MEAG makes use of its competence in sustainability issues gained through its close cooperation with Munich Re, which is a major investor in sustainable investments.
In addition to the MEAG Nachhaltigkeitsfonds, Munich Re staff can invest privately in a solar fund.