Fund manager Hermes Investment Management has picked up a $400 million global high yield bond mandate from AP1, one of five buffer funds in the Swedish pension system.
AP1 said it wanted to diversify its high yield exposure and ESG was an important aspect to the investment strategy. Majdi Chammas, head of external management, and Tina Rönnholm, portfolio manager responsible for external High Yield investments at AP1, said: “We share the same belief around our duty of delivering strong returns to our stakeholders, including considering the impact on society as a whole. The team is very advanced in the way they integrate ESG issues in their core investment process. Their innovative approach of pricing ESG risks in terms of spread in their fundamental credit analysis is leading in the industry.”
Hermes co-heads of credit, Fraser Lundie and Mitch Reznick, said: “AP1 are one of the most innovative and forward-thinking pension funds. Clearly they, like us, believe that creditors have as much interest as shareholders in seeing companies’ ESG practices improve, and that active engagement can facilitate those improvements.”