M&G Investments launches ESG global high yield fund
London based M&G Investments has launched a fund focusing on the global high yield market that will incorporate environmental, social and governance (ESG) factors.
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.
Three stage screen
ESG considerations are fully integrated in the investment process through a three 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, M&G said.
The fund will exclude any companies that are classified as industry laggards displaying poor ESG credentials compared to its industry peers
James Tomlins, co-fund manager said: “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, added: “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.”