BNY Mellon has extended its range of sustainable products by launching an absolute return global bond fund under the management of boutique Newton Investment Management.
The Sustainable Global Dynamic Bond Fund invests in sustainable government 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.
It is the fifth UK-domiciled sustainable fund launched as part of Newton’s sustainable range of products.
The fund will measure its annual performance against cash – 1-month LIBOR – plus 2% over five years before fees.
Head of Fixed Income at Newton Investment Management, Paul Brain, said ESG factors had already been proven to have a material benefit on a company’s financial profile and that in-depth analysis of ESG factors, alongside issuer engagement where appropriate, could help to enhance long-term investment opportunities in the growing sector.
“The assessment of ESG factors within credit analysis enhances risk mitigation, which is particularly important given the asymmetric nature of bond returns,” said Brain.