Stockholm (NordSIP) – Investors’ appetite for sustainable credit is growing steadily, and attentive asset managers seem only eager to oblige. On October 25, M&G announced the launch of two new credit strategies, promising to incorporate sustainability factors into the rigorous value-driven investment approach that the firm’s fixed-income team is known for. Both new Luxembourg-based SICAV funds, M&G Sustainable European Credit Investment Fund and M&G Sustainable Total Return Credit Investment Fund, will be classified as Article 8 under SFDR.
“M&G holds a long track record in providing clients with some of the best-in-class credit strategies, based on the same rigorous analysis and engagement we follow with ESG criteria,” comments David Lloyd, Head of Institutional Public Debt at M&G Investments. “The funds we’re launching today have been designed with investors’ needs in mind, to strike the right balance between achieving favourable ESG outcomes while delivering attractive investment returns,” he adds.
According to the announcement, the Stockholm-based Nobel Foundation has provided the seed capital to launch one of the new funds, the M&G Sustainable Total Return Credit Investment Fund. The fund, managed by credit veteran Richard Ryan, is designed as a flexible, sustainable bond proposition, in line with M&G’s old Total Return Credit Investment Fund. The strategy’s investment universe is not constrained by geography or credit quality. It will focus on identifying attractive opportunities in developed markets while maintaining an overall duration of close to zero throughout the investment cycle.
The new M&G Sustainable European Credit Investment Fund, investing across the European investment grade universe, will follow the investment philosophy behind M&G’s European Credit strategy, which has a solid ten-year track record. The management team, led by Gaurav Chatley, will apply a strict bottom-up, research-driven, and value-based approach to individual credit selection.
Both funds will have sustainability factors at the core of their investment process, with robust environmental and social safeguards in place. They will avoid issuers deemed to be in breach of the UN Global Compact Principles of human rights, labour, the environment and anti-corruption, and countries classified as “Not Free” by Freedom House. They will strive for a lower weighted average carbon intensity than that of each funds’ investment universe. Moreover, both funds will include issuers with superior ESG characteristics and exclude ESG laggards.
The launch of the new products is a part of fulfilling M&G’s ambitious sustainability plan, revealed earlier this year. “As a global investor, we can – and do – play our part in finding solutions for some of the most challenging issues for humankind, from climate change to societal inequality. We think M&G can change the future for the better, and we’re determined to deliver,” declared M&G plc. Chief Executive, John Foley.