CROATIA: First Funded Sustainable UCITS Fund Approved After SFDR Regulation Enters into Force

Wednesday May 19 2021

The Croatian Financial Services Supervisory Agency (Hanfa) has issued an approval for the establishment and management of the Erste Green Equity Fund, a funded UCITS fund aimed at sustainable investment. The fund will be managed by Erste Asset Management from Zagreb. This is the second “sustainable” UCITS fund on the Croatian market dedicated to investment taking into account environmental, social and management risks (ESG factors), ie the first “sustainable” fund to receive Hanfa approval after the entry into force of the Regulation on Sustainability Disclosures. in the financial services sector (SFDR Regulation).

It is a feeder open-end investment fund with a public offering (the so-called feeder) whose funds are invested in the so-called “Master” or “Main Fund”, which in this case is Erste Green Invest, which aims at sustainable investment, and which is managed by Erste Asset Management GmbH from Vienna. The main fund will make a return on investments in shares whose issuers, according to the assessment of their managers, significantly contribute to environmental protection and are thus classified as sustainable. By investing the largest part of its assets in the Main Fund (at least 85%), the Erste Green Equity Fund indirectly takes over the investment goal and strategy of the Main Fund, and consequently it is considered a fund that aims at sustainable investments.

The selection of General Fund shares is focused on issuers whose products or services contribute to achieving goals such as climate protection, adaptation to climate change, energy conservation, protection of freshwater and marine resources, transition to circular management, waste reduction, recycling and mitigation of pollution and ecosystem health.

At the same time, the General Fund is prohibited from investing in issuers whose business activities include or encourage nuclear energy, all forms of genetic engineering, human and labor rights violations, exploitation of children, proven manipulation of financial statements, corruption, pornography, prohibited weapons production, tobacco production, unnecessary testing on animals, use of human embryos for commercial purposes, commercial operation of clinics for abortion, gambling, coal extraction and processing, production of electricity from coal or oil, extraction of oil and natural gas by conventional or unconventional methods, violation of recognized norms, principles and standards for protection human rights and all forms of discrimination.

The fund is intended for investors who are willing to exhibit in stock markets in the long run, and at the same time are willing to take higher risk. The recommended minimum investment horizon is ten years.

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