Nordea Reopens Giant Article 9 Fund After 3 years

Nordea Asset Management has decided to remove investment restrictions on its Global Climate and Environment fund, allowing new investors to participate in the strategy once again. The fund, which had been soft-closed nearly three years ago, saw a significant decline in assets, prompting the firm to reopen it to a wider investor base.

Background

The Global Climate and Environment fund had been closed to new investors in mid-2021 due to rapid asset growth, reaching around €13bn at its peak. However, assets declined to €8.5bn by the end of March, prompting Nordea to reconsider its decision and lift the restrictions.

Reasons for Closure and Reopening

• Nordea attributed the initial closure to the fund's rapid asset growth, which necessitated careful monitoring of further inflows.
• The recent decline in assets was influenced by factors such as rising interest rates and geopolitical volatility, leading to outflows from sustainability-focused products like the Global Climate and Environment fund. This assets drop, lead the asset manager to reopening the fund and allowing new inflows into the strategy.

Fund Management and Performance

The fund is co-managed by Henning Padberg and Thomas Sørensen. Despite the recent outflows, the fund has delivered strong performance compared to its peers. Over the three years ending in March 2024, it returned 9.6% in US dollar terms, outperforming the average fund in the Equity – Ecology sector, which lost 3% during the same period. On a one-year basis, the fund returned 10.7%, surpassing the sector average return of 6%. (according to Morningstar data).

Outlook

Nordea remains optimistic about the long-term prospects of climate and environment-focused investments, anticipating renewed demand in the future. The company believes that commitments to accelerated decarbonization by companies, organizations, and governments will drive continued interest in sustainability-themed investment solutions.

The reopening of the Nordea Global Climate and Environment fund reflects the evolving market dynamics and investor preferences, highlighting the continued relevance of sustainable investing in today's financial landscape.