Uni of Adelaide commits to Osmosis’ ex-Fossil Fuels fund

The University of Adelaide endowment fund has committed to invest in Osmosis’s Resource Efficient ex-Fossil Fuels Fund.

The strategy is a popular choice among a number of distinguished tertiary education providers, including the University of NSW and the UK’s Oxford University Endowment Management (OUem), who seeded its ICAV fund launch in September 2023.

The strategy, developed in 2020 and opened to Australian wholesale investors in 2023, is designed to both protect investors from reflation in fossil fuel commodity prices as well as value destruction associated with increasing regulation and societal headwinds of carbon-intensive industries.

Osmosis touts the fund’s significantly lower carbon footprint than the benchmark MSCI World, delivering notable reductions in carbon (-65%), water (-62%), and waste (-64%) ownership relative to the MSCI World.

“The portfolio uniquely addresses both the supply side of fossil fuel energy generation through fossil fuel divestment and the demand side of fossil fuel energy consumption by reallocating the active divestment risk to the most highly correlated resource-efficient companies across the economy,” Osmosis notes.

Employing “strict environmental screens”, the strategy prohibits investment in companies that derive more than 5% of their revenues from fossil fuels or nuclear power. It also excludes companies with any revenue from controversial weapons, civilian firearms, and tobacco manufacturing and those companies in breach of the UN Global Compact Principles.

Since its launch in 2021, the fund has returned 47.6% to investors – 0.67% shy of the benchmark – and 14.4% return in the 12 months to end of February 2025.

Welcoming the University of Adelaide’s investment, Osmosis chief executive Ben Dear recognised the educator’s environmental leadership.

He added: “It is crucial when seeking to remove exposure to fossil fuels, that additional mitigation is undertaken to deal with demand as well as supply. Our Core Equity Ex-Fossil Fuels strategy achieves this while also reducing the portfolio’s exposure to water and waste.”

As of the end of February 2025, the ex-Fossil Fuels Fund manages US$1.75 billion (AU$2.7 billion).