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Deutsche Bank launches two Ucits III Croci carbon funds


Deutsche Bank’s funds platform has launched two Ucits III funds that give investors exposure to a stock portfolio of companies with low greenhouse gas emissions.

Deutsche Bank’s funds platform has launched two Ucits III funds that give investors exposure to a stock portfolio of companies with low greenhouse gas emissions.

The DB Platinum Croci Carbon 100 Euro TR Fund, a global long-only strategy, and the DB Platinum Croci Carbon Alpha TR Fund, a global long-short strategy, target strong investment returns combined with an assessment of the ability to reduce exposure to the potentially adverse economic impact of high greenhouse gas emissions.

Both these funds favour stocks which are attractive from an investment standpoint according to Deutsche Bank’s Croci proprietary methodology and which are relatively low emitters of greenhouse gases in their respective sectors.

‘These funds are innovative and meet a specific requirement for investors who are looking for low carbon investment opportunities,’ says Manfred Schraepler, head of the funds group at Deutsche Bank.

The Croci Carbon 100 strategy adopts a ‘best of breed’ approach by using the Croci selection methodology to choose 100 stocks that have a lower emission factor than the average of their respective sectors.

The Croci Carbon Alpha strategy employs a ‘blended’ approach by weighting all stocks, positively or negatively, from its global selection pool, in a combination of emission and Croci factors. The negative and positive positions are matched to obtain a market, region, and sector neutral portfolio, and the exposure of the strategy to this portfolio is adjusted to maintain a five per cent volatility target.

The Croci equity funds have seen over EUR340m of net inflows, representing a rise of 36 per cent in assets under management since the beginning of 2009.

The emission data has been developed in conjunction with Trucost, a provider of environmental impact data, and is used to derive an emission factor for each company representing its overall emissions of greenhouse gases per unit of investment.

The funds’ investment strategies are based on the assumption that companies with lower emissions than their sector average have or will have more sustainable cash flows than those with higher emissions, and that in a world of increasingly strict regulation around carbon dioxide and other greenhouse gases, higher CO2 emitters will incur costs that could damage their profitability.

Croci – cash return on capital invested – is a proprietary research model developed by Deutsche Bank and launched in 2004. It makes the valuation of companies comparable across sectors as well as markets and aims to identify the best value stocks in the market. Currently, about EUR3.5bn of assets are invested in accordance with strategies which are based on Croci.

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