Beyond Fossil Fuels Fund
[quote_right]We will continue the vital work of speaking environmental truths and pressing for immediate improvements in fossil fuel companies, using our position as shareholders through our traditional equity funds. The Beyond Fossil Fuels funds give investors just one more way to respond to the call to climate action.
Kathryn McCloskey, Director of Social Responsibility[/quote_right]
Expanding UCF’s action to address climate change through investment
The Beyond Fossil Fuels Fund is United Church Funds’ global equity fund free of companies exploring for or producing fossil fuels. Alongside its partner balanced fund, the Beyond Fossil Fuels Fund is designed to be a part of the solution of the climate crisis. As with all separately managed portfolios at United Church Funds, this pair of funds utilizes shareholder action as a means to compel corporate improvement and excludes companies in morally unacceptable industries or companies with unacceptable practices.
What elements do the Beyond Fossil Fuels Funds comprise?
An Enhanced Index Strategy
The Beyond Fossil Fuels Funds both use enhanced indexing, which combines positive elements of both passive and active management. Because enhanced index managers invest in primarily the same companies included in a commercially available index — in this case, the MSCI All Country World Index (ACWI) Investment Market Index (IMI) — the strategy resembles passive management. However, enhanced indexing allows managers the latitude to vary position holdings from the underlying index in order to capture attractive quantitative characteristics — adjustments that can lead to positive performance versus the index over time. Enhanced indexing strategies also enjoy the benefit of lower turnover and lower fees than actively managed portfolios.
A Global Equity Option
The Beyond Fossil Fuels Fund provides equity access to developed markets and emerging market countries, while seeking to eliminate exposure to most companies with fossil fuels reserves. The primary investment objective of the fund is to generate a rate of return that exceeds the MSCI ACWI IMI, re-weighted after excluding the stock of companies selected for exclusion.
A Balanced Fund Option
Because most United Church Funds’ investors choose the Moderate Balanced Fund for its classic asset allocation, the Beyond Fossil Fuels Fund needed a partner fund to replicate the popular allocation — without companies that produce or explore for fossil fuels. The Beyond Fossil Fuels Balanced Fund fills that niche, by combining the Beyond Fossil Fuels Fund as the equity allocation, and a divested core fixed income allocation.