BlackRock has launched a new fund in response to the growing demand for investments incorporating environmental, social and governance (ESG) factors.
The BlackRock BSF Sustainable Euro Bond Fund will be managed by Michael Krautzberger, who is the head of the Fundamental Pan European Fixed Income team, and Ronald van Loon. They will be supported by the European Fixed Income team.
The securities included in the fund are positively screened for ESG considerations using MSCI’s ESG ratings for corporate, sovereign and government-related issuers.
The new fund invests in a broad range of sources to add alpha and maximise total return, primarily focusing on euro-denominated investment grade bonds.
There is a strong emphasis on diversification, and active risk is spread through selection of country, sector, security, duration and yield curve positioning, as well as through flexibly managed currency exposure.
“Sustainable investing is becoming more mainstream as investors globally are placing greater emphasis on transparency while seeking an ESG approach to their investments,” Krautzberger said.
“We are looking to incorporate MSCI’s ESG insights in our active positioning, for example underweighting issuers with deteriorating ESG profiles that we expect to be downgraded by MSCI. We also expect to hold a higher proportion of green bonds in this fund than we do in non-ESG strategies,” he said.
BlackRock manages over $1.4trn in fixed income assets on behalf of global clients, including both active and index strategies.