Stockholm (NordSIP) – BlackRock started listing a circular economy fund at the beginning of October on the Luxembourg Stock Exchange. The BlackRock Global Funds Circular Economy Fund invests at least 80% of its total assets in shares of companies globally that benefit from or contribute to the advancement of the “Circular Economy”.
The “Circular Economy” is an approach to economic activity focused on minimising waste by considering the full life-cycle of materials, and redesigning products and operations to encourage greater re-use and recycling.
Circular Economy Companies
The fund will invest in companies in all sectors across the globe, so long as they contribute to the advancement of a circular economy. Within the circular economy theme, BlackRock recognises four types of businesses: “Adopters”, “Enablers”, “Beneficiaries” and “Business model winners”.
Companies meaningfully adopting ‘circularity’ in their operations are considered “Adopters”. This category includes companies involved in sustainable fashion or companies that commit to using recycled plastics in production processes.
Businesses that provide new, innovative solutions directly aimed at solving inefficient material use and pollution are considered “Enablers”. These include companies involved in recycling of products, companies involved in reducing inputs such as water and energy and companies enabling sustainable transportation.
Companies that provide alternatives to materials that cannot be recycled or supply these to the extended value chain are “Beneficiaries”. Within this category, the fund will consider businesses that will see an increase in demand for their products from shifts towards more easily recyclable products. Companies that offer natural or plant-based circular alternatives to non-recyclable and non-biodegradable products are also “Beneficiaries”.
Finally, the fund will also focus on “Business model winners”. These are companies that facilitate efficient or more responsible consumption via innovative business models. Companies replacing existing business models with digital alternatives and companies that are involved in repair or resale that prolongs the use of goods, fit in this category.
A New Partnership and Ambitious Asset Manager
BlackRock launched this fund in partnership with the Ellen MacArthur Foundation. The Foundation provides the asset manager with expert insights and guidance on circular economy principles and practices, which are used to inform the investment methodology of the Fund.
The Circular Economy Fund will be managed by Evy Hambro, who until recently was co-managing BlackRock’s £800 million World Mining Trust. During his tenure at the helm, the trust became the largest shareholder in a number of small mining companies that aimed to produce lithium for batteries.
The fund is an actively managed long term strategy. It has a 5% entry fee and charges a 1.82% yearly management fee. There is no performance fee for this fund.