More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
LifePath, which opened in 1997, is part of a series of target-date funds designed specifically for UK DC pension scheme savers and provides members with access to 12 asset classes invested through low-cost, transparent index funds tailored for members based on their age.
While BlackRock already uses an ESG integration policy for LifePath to ensure "continuous review of the investment strategy and consideration of underlying investments" the move is set to materially increase its ESG exposure.
The increase in exposures is planned to come from developed market equities, where LifePath will be investing in two ESG index funds, while exposure will significantly increase in the BlackRock ACS World ESG Equity Tracker Fund.
A further exposure to the MSCI World ESG screened developed market index is also set to be added.
BlackRock head of UK Sarah Melvin said: "The changes we are making to the LifePath strategy reflect our commitment to deliver sustainable long-term returns on behalf of pension savers, as they set money aside and invest for their financial future.
"As pension scheme trustees increasingly look for ways to further incorporate ESG investments into their schemes, this strategy enables them to balance the risk and return of their portfolios, while fulfilling their regulatory obligations."
LifePath is currently the principal default of the Aegon Master Trust. Aegon managing director for investment solutions Tim Orton said: "LifePath is a critical solution for current and future Aegon scheme members and we are committed to satisfying their increasing interest in responsible investing. I'm delighted that this change addresses this growing customer need."
The move follows LifePath UK funds' incorporation of a sustainable building block, the BlackRock ACS World ESG Equity Tracker Fund, in July 2019.
