BNY Mellon Investment Management has expanded its sustainable offering with the launch of an absolute return global bond fund under the management of boutique Newton Investment Management.
The fund is a sustainable version of Newton's existing Global Dynamic Bond strategy and is the sterling version of the Euro currency BNY Mellon Sustainable Global Dynamic Bond Fund in the Dublin-domiciled BNY Mellon Global Funds range. It is an absolute return strategy, following an unconstrained, dynamic asset-allocation approach. It also has the flexibility to use stabilising assets and hedging positions to provide downside protection.
The strategy invests in sustainable sovereign bonds and bonds of companies that positively manage the material impacts of an issuer's operation and products on the environment and society. It avoids bonds with "material unresolvable ESG risks" which are likely to negatively affect future performance, and does not invest in the bonds of any company that derives more than 10% of its turnover from the production and sale of tobacco.
Managed by Newton head of fixed income Paul Brain, Trevor Holder, Carl Shepherd, Scott Freedman and Martin Chambers, the portfolio will target companies that are deemed to positively manage the material impacts of their operation and products on the environment and society.
Performance is measured against cash (one-month LIBOR) + 2% per annum over five years before fees, and the fund aims to achieve a positive return on a rolling three-year basis.
Brain 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."
