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Cambridge spurs creation of ESG-focused emerging markets fund

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Cambridge Associates, provider of investment advice and research to institutional investors and private clients, is helping several institutions prompt the development of an environment

Cambridge Associates, provider of investment advice and research to institutional investors and private clients, is helping several institutions prompt the development of an environmental, social and governance-focused emerging markets fund for US institutional investors.

"There are currently no ESG-focused emerging markets commingled vehicles available to US institutional investors – largely because of a chicken and egg situation. Managers with a platform to do this kind of fund perceive a lack of interest on the part of US-based institutional investors, but the reality is that institutions haven’t spoken up because they’ve yet to see a viable vehicle," says Kevin Stephenson, director of the mission-related investing group at Cambridge Associates.

"We’re working with institutions to bridge this gap by corralling their interest. We will then help them conduct a search for a qualified manager willing to work with them on the specifics of an ESG-focused, emerging markets vehicle.’

Cambridge Associates’ mission-related investing group is working on the project with The Fetzer Institute, Meyer Memorial Trust, a West Coast community foundation, and others. The firm welcomes participation by other institutions with a commitment to mission-related investing, whether or not they are Cambridge Associates clients.

The group is likely to select a large organisation with both a strong emerging markets track record and an established ESG/socially responsible/sustainability platform to manage the fund.

The vehicle will incorporate several socially responsible investing strategies, to potentially include positive screens, negative screens and corporate engagement. The goal is to develop a fund large enough to be viable out of the gate – and thus allay institutional concerns about small funds – but that welcomes investments as small as USD1m.

Four global equity firms have already expressed interest in meeting this mandate.

Sandra A. Urie, president and chief executive of Cambridge Associates, says: "It is always a privilege to work with our clients and other institutions to encourage the creation of new investment vehicles that will meet and anticipate their needs and goals. In fact, we have a long track record pointing leading managers to investment opportunities that they may not have thought are commercially viable but are, in fact, on the minds of sophisticated, long-term investors."

Said Doug Stamm, chief executive of Meyer Memorial Trust, adds: "Foundations and other institutional investors are eager to identify investment opportunities across all asset classes that align with their mission and values, thereby achieving greater positive impact while pursuing market rate returns. We applaud Cambridge Associates’ efforts in advancing this field and are very excited to collaborate with other US institutions to open new possibilities for mission-related investing in emerging markets."

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