Natixis Global Asset Management has launched the first series of 401(k) target-date funds to focus on environmental, social and corporate governance (ESG) investing.
The Natixis Sustainable Future Funds feature vintages ranging every five years from 2015 to 2060 and rely heavily on the expertise of Mirova—a Natixis-owned asset management company with 30 years of ESG investing experience—among other investment constituents and sub-advisors.
“We, as a retirement industry, look for ways to create more engagement,” said Ed Farrington, Natixis’ executive vice president for retirement strategies. “What our investors are telling us is that they want to be more connected with their investments.”
While some question if socially responsible investing (SRI) sacrifices returns in favor of adhering to a values-based investment thesis, Farrington suggests ESG target funds could be the badly needed retirement solution for millennials who, according to a slew of research, aren’t saving enough to afford life after work.
Natixis’ own research shows that 84 percent of millennial investors want their investments to reflect their personal values, while 71 percent say they would be more willing to contribute to a retirement plan if they knew their investments were doing social good.
“This is a high conviction statement from us,” said Farrington, adding that the proposition of going good and doing well is strong enough to fund retirement, so long as a proper investment strategy is employed.
For the Natixis Sustainable Future Funds, Natixis will use a “research-driven active management strategy,” which involves factoring out investments with poor ESG scores, according to Mirova’s own ESG ranking system. Investment opportunities will then be ranked by how well they address global ESG megatrends, such as climate change, urbanization and natural resource depletion.