Stockholm & London, 18 September 2019 – M&G Investments (“M&G”) today announced the M&G (Lux) Global High Yield ESG Bond Fund has been chosen by Kåpan, the Swedish government workers pension fund based in Stockholm, for seed investment.
Launched late 2017 with internal capital to complement the existing €1,2 bn Global High Yield strategy (as at end of July), the M&G (Lux) Global High Yield ESG Bond Fund is co-managed by James Tomlins and Stefan Isaacs, who together, have over 30 years of experience of investing in high yield. They are supported by M&G’s extensive credit teams. The fund invests at least 80% of its assets in global high yield bonds to form a flexible and highly diversified portfolio in terms of issuers, geographies and sectors.
Environmental, social and governance (ESG) considerations are fully integrated in the investment process through a 3-stage screen. The first stage excludes companies in breach of the United Nations Global Compact principles. The second layer filters out companies that derive their revenue from specific sectors: tobacco, alcohol, adult entertainment, gambling, thermal coal, defense and weapons*.
The third stage filters companies according to their ESG credentials based on ratings provided by MSCI, which together with M&G’s in-house analytics, delivers an MSCI ESG score of 5.82 versus 4.06 for the index and 5.47 for the Global Investment Grade index**.
Due to the comprehensive assessment of a range of ESG factors, the fund further excludes any companies that are classified as industry laggards displaying poor ESG credentials compared to its industry peers. This involves a sophisticated analysis of a wide range of complex issues, from energy efficiency and pollution to working conditions and product safety.
James Tomlins, co-fund manager, says, “We firmly believe that incorporating financially material ESG factors into our credit analysis can help ensure a more comprehensive understanding of the companies we invest in and lead to better investment decision. As such, it’s key to have a sustainability-focused investor such as Kåpan invest in the fund.”
Robert Heaney, Head of the Nordic Region at M&G Investments says: “As is widely appreciated, Nordic investors continue to be at forefront of thinking about and incorporating ESG factors into their investment decisions and we’re very happy to continue our cooperation with Kåpan and welcome them as an investor in this fund.”
M&G Investments established a local presence in Stockholm in mid-2012 and manages over €3bn on behalf of Nordic institutional investors across Sweden, Denmark, Norway and Finland. In 2018, several Nordic investors also invested in M&G’s Impact Financing Fund, Europe’s first private debt impact fund. In late 2017, Nordic Pension and Insurance institutions made up 20% of the external capital raised for the first Greenfield Infrastructure fund managed by Infracapital, the infrastructure equity arm of M&G.
Image © NordSIP