BNY Mellon Investment Management has expanded its sustainable offering with the launch of an absolute return global bond fund under the management of its boutique Newton Investment Management.
It is the fifth UK-domiciled sustainable fund launched as part of Newton's sustainable suite of products, which aim to invest in sustainable sovereign bonds, and attractive companies with sustainable business practices and no material unresolvable ESG issues.
Managed by Newton's flagship global real return team, the fund represents a sustainable Version of Newton's existing global real return strategy. It is actively managed, and pursues an absolute return style performance goal. The predominantly classic income-oriented assets, with an additional level of risk-compensating positions, are intended to dampen volatility and preserve capital.
ESG factors have already been proven to have a material benefit on a company’s financial profile"
The fund invests in traditional asset classes such as stocks, corporate bonds, government bonds, money market instruments and derivatives and can also be involved in other assets such as commodities through tradable securities. It follows Newton's strict sustainability criteria.
It avoids companies with incalculable ESG risks, which should affect future performance, and does not invest in companies that generate more than 10% of their turnover from the production and sale of tobacco.
It will be managed by Paul Brain, Trevor Holder, Carl Shepherd, Scott Freedman and Martin Chambers and will measure its performance against cash (1-month LIBOR) + 2% per annum over five years before fees. In doing so, it seeks to achieve a positive return on a rolling three-year basis
Newton, which has £4.7bn sustainable and ethical assets under management, runs seven sustainable strategies across the UK-domiciled BNY Mellon funds range and Dublin-domiciled BNY funds range.
Paul Brain, Investment Leader, Fixed Income Team, Newton Investment Management, said: "ESG factors have already been proven to have a material benefit on a company's financial profile and we believe in-depth analysis of ESG factors, alongside issuer engagement where appropriate, can help to enhance long-term investment opportunities in this growing sector."
"The assessment of ESG factors within credit analysis enhances risk mitigation, which is particularly important given the asymmetric nature of bond returns," continued Brian.
The fund has an absolute-return strategy, and will follow an unconstrained, dynamic asset-allocation approach. It also has the flexibility to use stabilising assets and hedging positions to provide downside protection.