M&G Investments today announces the launch of a fund focusing on the global high yield market that will incorporate environmental, social and governance (ESG) factors.
"Using our expertise in credit analysis, we have built a diversified high yield portfolio which applies an ESG screen to the global high yield market in a consistent and measurable way."
ESG considerations are fully integrated in the investment process through a 3-stage screen. The first stage excludes companies in breach of the United Nations Global Compact principles. The second layer filters out companies that derive their revenue from specific sectors: tobacco, alcohol, adult entertainment, gambling, thermal coal, defence and weapons*. The third stage filters companies according to their ESG credentials based on ratings provided by MSCI. Due to a comprehensive assessment of a range of ESG factors, the fund will exclude any companies that are classified as industry laggards displaying poor ESG credentials compared to its industry peers. This stage involves a sophisticated analysis of a wide range of complex issues, which might cover everything from energy efficiency and pollution to working conditions and product safety.
The strategy will be co-managed by James Tomlins and Stefan Isaacs, who account for over 28 years of experience of investing in high yield, and will be supported by M&G’s extensive capabilities in the credit space. The fund will invest at least 80% of its assets in global high yield bonds to form a flexible and highly diversified portfolio in terms of issuers, geographies and sectors.
James Tomlins, co-fund Manager says: “Using our expertise in credit analysis, we have built a diversified high yield portfolio which applies an ESG screen to the global high yield market in a consistent and measurable way. Focusing on negative screening and ESG integration, the fund strikes the right balance between being able to express investment views and responsible investing outcomes.”
Graham Mason, CIO for M&G equity, multi-asset and retail fixed interest, says: “The fund aims to provide a solution for those investors looking for higher yielding strategies in the fixed income space while incorporating responsible investing criteria. Investors’ attitudes towards responsible investment and demand for ESG solutions have evolved significantly in recent years. As long-term active managers M&G is especially well positioned to provide strategies that meet these criteria while still helping clients to reach their financial goals. We can play an essential role in changing attitudes and expanding responsible investment across asset classes and markets.”