Apple, JetBlue Buy Goldman ESG Cash Fund
July 24 2019 - 12:31PM
Dow Jones News
By Matt Wirz
Apple Inc., JetBlue Airways Corp. and other U.S. corporations
are parking cash in a new socially conscious offering managed by
Goldman Sachs Group Inc.
The $1.5 billion money-market fund helps corporate treasurers
steer money to bond brokerages operated by minorities, women and
veterans, reflecting a growing shift toward investing with
environmental, social and governance, or ESG, principles.
Money management is crucial for companies such as Apple, which
had a $245 billion cash pile at the end of 2018. But there are few
ESG options among money-market funds, which invest about $3.3
trillion for clients in short-term bonds issued by high-quality
government and corporate borrowers.
"We had a lot of demand from corporate clients asking what was
available, " said Christina Kopec, a managing director focused on
liquidity solutions at Goldman Sachs Asset Management. "The answer
is, 'not a lot.'"
Structuring investment vehicles that fulfill ESG objectives
without compromising returns can be time consuming, but Goldman saw
a relatively simple opportunity last fall in the creation of a
money-market fund focused on a market that already had a built-in
ESG element, Ms. Kopec said.
The firm repurposed an existing money-market fund in December to
invest in government debt, especially so-called agency notes issued
by the Federal Home Loan Mortgage Corp., with an additional mandate
to prioritize buying from bond dealers that are certified as being
owned by minorities, women and veterans. The fund, which buys about
half of its assets from such dealers, has since doubled in size,
attracting $850 million in the first half of 2019.
Minority and women-owned dealers tend to have less capital than
their competitors and the Goldman fund directs business their way
as long as they offer attractive pricing on the securities they
sell, Ms. Kopec said. The ESG money-market fund returned 2.23% in
the 12 months through June, compared with a 2.10% average return
for comparable peers, according to data from Goldman.
JetBlue was one of the first corporate clients to buy into the
revamped fund.
"They approached us with what is fundamentally a diversity
product," said Sophia Mendelsohn, JetBlue's head of sustainability.
"It made it easy for our treasury department to do their
traditional jobs, while bringing into account another element."
The airline is continuing to consult with Goldman and other
investment banks to find other ESG financial products, she
said.
For Apple, the Goldman fund fits into the company's broad
initiative to increase diversity.
"We're proud to have been at the forefront of developing this
fund," said Gary Wipfler, the company's corporate treasurer. "We
hope this fund will help bring more opportunities for diverse firms
and investors."
U.S. government-bond yields fell Wednesday, with the yield on
the benchmark 10-year Treasury note recently trading at 2.051%,
according to Tradeweb, from 2.074% on Tuesday. Yields fall as bond
prices rise.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, fell slightly to 90.41 from 90.47 Tuesday.
Write to Matt Wirz at matthieu.wirz@wsj.com
(END) Dow Jones Newswires
July 24, 2019 13:16 ET (17:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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