PGIM launches carbon solutions fund

Investing in companies pursuing decarbonisation opportunities for growth and innovation

PGIM has bolstered its equities offering with the launch of a fund to invest in the transition to a low carbon economy.

PGIM Jennison Carbon Solutions Equity fund is a sub-fund of the Irish-domiciled Ucits fund umbrella, PGIM Funds plc, and is available to institutional and wholesale investors.

The fund, which will be managed by PGIM’s active equity manager, Jennison Associates, invests in companies pursuing decarbonisation opportunities for growth and innovation

This includes companies that are reducing global carbon emissions and aiding the transition to a low-carbon economy. 

Companies, for example, working in areas such as fuel decarbonisation, carbon capture and storage, electrification, renewables, infrastructure modernisation and energy efficiency.

The fund incorporates emissions avoided into its analysis. Emissions avoided, known as Scope 4 emissions, “are crucial to the decarbonisation effort, but are often overlooked by investors”, PGIM said in a statement.

Taking a global all-cap multi sector approach, this thematic global equity portfolio seeks to invest across a broad range of companies, particularly where the contribution to decarbonisation and likely future growth is being underestimated. 

Through a bottom-up stock selection approach, the portfolio has a concentration of 45 to 65 high-growth companies. The fund is benchmarked against the MSCI All Company World Index Investable Market Index.

The investment team is led by three portfolio managers: global natural resources equity portfolio managers, Neil Brown and Jay Saunders, and global utilities and infrastructure portfolio manager, Bobby Edemeka. 

The portfolio management team averages nearly 20 years of experience at Jennison investing in the natural resources, global utilities, renewable energy and infrastructure sectors.

 Brown, co-portfolio manager of the PGIM Jennison Carbon Solutions Equity fund, said: “We are in the early stages of a transition to a low-carbon economy that will require decarbonisation efforts from a much broader set of sectors than investors typically consider. This means there are growth opportunities, which have yet to be fully priced into stocks.

“Crucially, our fund looks beyond reported emissions statistics with an eye on companies aiding in the avoidance of future emissions, which opens up significant investment opportunities that are overlooked by investors.”