Schroders is set to rebrand its Global Energy Transition fund to Schroder Global Alternative Energy Fund on 26 February, with new EU rules on sustainable fund labelling due to come into effect.
UK manager Schroders is set to rebrand its £167m Global Energy Transition Fund in a bid to comply with EU regulations on sustainable fund labelling.
The global equity fund, which is available to retail and institutional investors in GBP, USD, EUR, CHF, and SGD share classes, has been particularly popular among European investors. It focuses on investments in industrials, utilities, and information technology and is managed by Alex Monk, Felix Odey, and Mark Lacey.
The European Securities and Markets Authority (ESMA) has introduced new guidelines on the labelling of sustainable and ESG funds, which came into force at the end of last year, though existing funds, such as the Schroders offering, have until May to comply with the new guidelines.
The new guidelines define transition strategies as assets that will become sustainable over time and require funds to dedicate at least 80% of their portfolio to assets that meet the criteria for transition assets.
A spokesperson for Schroders confirmed to Net Zero Investor that the fund’s emphasis was more on investing in solution assets rather than transition stocks. “Although there is no regulatory obligation to change the fund name in the UK, we are a global fund house and we felt it important to ensure that the fund’s focus on investing in solution assets is clearly communicated,” they said.
Like many of its clean energy peers in listed markets, the Schroders fund has been hit by growing investor scepticism. The European share class fund has dropped by more than 36% since 2022, though it is still outperforming its benchmark, the MSCI Global Alternative Energy Index, which is down 53.2%.
Schroders is far from alone in its rebranding challenge. Recent research by Clarity AI among 3,200 funds labelled ESG or sustainable, distributed in Europe, shows that more than half contain breaches of the guidelines and will either have to divest from some assets or consider rebranding.
The new rules will come into force in May 2025. Fund houses that fail to meet ESMA’s new guidelines could be fined and risk reputational damage
