BlackRock has launched a UK version of a fund that invests in companies supplying the materials essential to the low carbon transition, to be managed by Evy Hambro’s thematics and sectors team.
The UK-domiciled BlackRock BFM Brown to Green Materials fund looks for investment opportunities created by the low carbon transition and decarbonising materials supply. The materials sector includes metals and mining, cement, chemicals, steel and construction materials.
It will be managed by Hambro, Olivia Markham and Hannah Johnson in BlackRock’s thematics and sectors team, who also run the Luxembourg-domiciled BGF Brown to Green Materials strategy that launched in 2023.
The team’s investment case argues that beneficiary sectors beyond renewables have been overlooked in the low-carbon transition so far and are now home to some attractive opportunities. It expects companies in industries that are decarbonising could benefit from a re-rating when their sustainability risks decrease as the transition to a low-carbon economy progresses.
Hambro, global head of thematic and sector investing at BlackRock said: “We are targeting what we believe to be an overlooked segment of the value chain for lower carbon technologies. Companies which are high emitters today, but that have credible plans to decarbonise, could offer a significant investment opportunity.
“As the theme broadens out even further, these companies leading emissions intensity reduction efforts in their industries could benefit from a first mover advantage as the low-carbon materials market develops.
“This strategy has been designed to provide clients with exposure to the brown to green materials theme, recognising that what could drive share prices from here, and what could make a positive difference to the world, is what happens moving forward rather than what’s already happened.”
BlackRock BFM Brown to Green Materials will adopt the ‘Sustainability Improvers’ label under the UK’s Sustainable Fund Disclosure (SDR) regime. This means it will ensure a minimum of 70% of total assets are invested in equities that contribute to the fund’s sustainability objective and its use of a SDR sustainability improvers label.
The firm said the fund is the only UK-domiciled mutual fund available in the market to use this label.
BlackRock’s thematics and sectors team has been managing natural resources portfolios since its formation in 1991 and thematic portfolios since 2001.