JP Morgan is launching a climate change fund that uses artificial intelligence to pick which stocks it invests in.
Using natural language processing allows JPM’s ThemeBot AI tool to process hundreds of millions of news articles, research notes, regulatory filings and company profiles to identify companies that are focusing on the low-carbon transition.
ThemeBot will not be working alone, however, with each stock it chooses then being analysed by a 90-strong research team who will mull the investment case before fund managers Francesco Conte, Yazann Romahi and Sara Bellenda make the final selection to build a portfolio of 50 to 100 companies.
Called the JPM Climate Change Solutions Fund and charging a fee of 0.70%, it is JP Morgan Asset Management’s first thematic fund in the UK and is being accompanied by two more funds, UK Sustainable Equity and Global Sustainable Equity, with fees at 0.75% and 0.70%.
Also this week, rival US giant Morgan Stanley Investment Management yesterday launched a sustainability-focused open-ended fund in the UK, the Global Balanced Sustainable Fund.
It invests in a multi-asset portfolio and adopts a “multi-dimensional approach to sustainable investing with the purpose of generating positive environmental and social impacts as well as generating financial return”, investing in companies that contribute to the realisation of a low-carbon economy with a goal of decarbonising the portfolio’s core share exposure according to the 1.5°C Paris Agreement goal, targeting net zero by 2050.