Newton Investment Management has expanded its range of sustainable funds with the launch of a new Sterling-based sustainable bond fund – its third ESG fund of the year.
The Newton Sustainable Sterling Bond fund is available for bot institutional and retail investors and is co-managed by Howard Cunningham and Scott Freedman.
It is the third fund to be launched in the sustainable range this year by Newton IM, which is the London-based global investment management subsidiary of The Bank of New York Mellon Corporation.
The new fund follows the launch of the Newton Sustainable Real Return Fund in April 2018, and the Newton Sustainable Global Equity Fund in January 2018.
Newton IM currently manages £2.6bn on a sustainable or ethical basis (as of 31 March 2018), according to company statistics
The objective of the fund is to achieve capital growth and income through investment predominantly in fixed interest securities that are denominated in Sterling or hedged back to Sterling, through investing in government and public securities and fixed interest securities of companies that demonstrate “attractive investment attributes and sustainable business practices”, the company said.
Julian Lyne, chief commercial officer at Newton IM, said: “Our approach to sustainable investing, which has been core to Newton since we launched 40 years ago, stems from our belief that companies that operate in a sustainable manner and optimise their resources will ultimately benefit shareholders and bondholders over the long term.
“The fund complements our recently expanded sustainable range.”
More than 35% of assets may be invested in gilts and the fund may invest up to 50% of assets in sub-investment grade fixed income securities.
Every holding in the fund is subject to an ESG quality review and the following policies are applied as part of a robust security selection process:
- Sustainable ‘red lines’: ensure that certain companies are not eligible for investment (such as companies that Newton IM considers are not aligned with the UN Global Compact Principles or the principles of a ‘2-degree’ world).
- Investing in companies that Newton IM considers positively manage the material impacts of their operations and products on the environment and society.
- Embedding ESG analysis to look beyond the financial statements.
- Avoidance of companies that Newton IM considers have material and unresolvable ESG-related risks, which are likely to negatively impact future performance. Newton’s responsible investment team can veto securities based on ESG factors.
- No direct investment in any company that derives more than 10% of its turnover from the production and sale of tobacco.