Industry Updates

Swedish insurer removes BlackRock mandate and adds Paris-Aligned metrics to index funds

The global and Swedish equity products will track Morningstar indices

Jamie Gordon


Swedish insurance and pensions company Länsförsäkringar has brought the management of two of its index funds in-house and reindexed the products to incorporate the European Union’s Paris-Aligned Benchmark (PAB). 

In a statement, the firm said its global and Swedish equity products, the Länsförsäkringar Global Indexnära and Länsförsäkringar Sverige Indexnära, will track custom indices from Morningstar based on EU directives on how to invest to achieve the 1.5°C target of the Paris Agreement.

Peter Svalstedt, senior index fund manager at Länsförsäkringar, who will oversee the funds, added the new indices are 50% less exposed to CO2 emissions than the outgoing benchmarks.

The two index funds used to be managed by BlackRock but Svalstedt said there was no reason for this continue as his firm can perform management in-house. 

“We changed the benchmarks to climate-adapted indices produced by Morningstar and in conjunction with that we in-sourced the management of the funds,” he told ETF Stream.

“The Paris-Aligned benchmarks imply that the CO2 footprint is initially reduced by 50% and then by 7% annually.

“This means that some high-emission companies are reduced in weight while companies that emit less or have a good future forecast are increased.”

Following the changes, the global equity product will have around 1500 constituents while the Swedish tracker now has 120 holdings. Svalstedt said the sector weightings of the two new indices are in line with the previous benchmarks.

Länsförsäkringar becomes only the latest Europe institutional investor to carry out ESG overhauls of its investments. Last year, two Dutch pension funds – Philips Pensioenfonds and Pensioenfonds Detailhandel – partnered with BlackRock to align more than €20bn of assets with the United Nations’ Sustainable Development Goals (SDG).

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