Ilmarinen Mutual Pension Insurance Co., Helsinki, invested €170 million ($204 million) in AXA Investment Managers‘ new mutual fund.
The €53 billion pension fund is a seed investor in the AXA WF U.S. High Yield Low Carbon Bonds fund, an Ilmarinen news release said.
The fund focuses on carbon and water intensity, targeting a significant reduction in carbon footprint vs. the benchmark index. A number of investment sectors have been excluded, including weapons and tobacco. The strategy is also aligned with the European Union’s Sustainable Finance Disclosure Regulation, which came into force in March.
“Fund managers have recently launched new ETF products, where ESG issues are integrated to the products. In addition, the product development of active funds is accelerating. This new fund is one of the first of its kind globally. Thus, we wanted to invest as a pioneer in this product,” Harri Vuorinen, senior portfolio manager, said in the release.
Ilmarinen has invested €5 billion in ESG ETF funds that take climate issues into account, equating to 90% of the passive investments in its listed equity portfolio. The fund aims to be running a carbon-neutral portfolio by the end of 2035.
Sustainable fixed-income strategies “are lucrative alternatives for an institutional investor,” Karoliina Lindroos, head of responsible investment, added in the release.
Further details on Ilmarinen’s allocation were not immediately available.