Stockholm (NordSIP) – Asset managers seem eager to respond to the increasing demand for sustainable fixed-income products. There is a notable push to integrate ESG criteria into investment processes, launch dedicated products, and boost teams with relevant expertise. UK-based specialist asset manager Jupiter is one of the firms to up their sustainability game in the fixed income area lately. Within a single week at the beginning of February this year, the asset manager announced the launch of two new sustainable fixed income products, covering both the light-green and the dark-green spectrum of the scale.
The new Jupiter Dynamic Bond ESG fund is a bespoke version of the flagship Jupiter Dynamic Bond strategy focusing on sustainability and will be classified as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR). Meanwhile, the firm’s new Article 9 strategy, the Jupiter Global Ecology Bond fund, will invest in bonds that aim to make a positive impact, focusing on mitigating climate change, natural capital, and restoring biodiversity.
The launch of Jupiter Dynamic Bond ESG, in particular, has already caught the attention of Nordic investors. Among early investors in the fund is Swedish family office AltoCumulus, the asset management arm of the Axel Johnson Group, reveals Magnus Jahnke, Managing Director and Head of Nordics at Jupiter Asset Management International SA.
According to Jahnke, Jupiter’s approach to sustainable fixed income investing incorporates several proprietary processes to help analyse and identify the strongest investment opportunities for each strategy. “The team’s credit analysts complete a rigorous double materiality ESG template to identify material ESG risk factors pertaining to an issuer,” he explains. “This is achieved through a centralised database holding templates for every credit in the fund including those deemed not to have made the ESG hurdle, an output of every company’s net-zero alignment and a sector-relative ESG score for every company,” he adds.
Regarding sovereign bonds investments, Jahnke explains that the Jupiter Dynamic Bond Sovereign ESG Framework provides the strategy with a tool that fund managers and analysts can use during the investment process to help inform sovereign macro view and identify the dynamics that might not be fully reflected in sovereign spreads. The fund managers and analysts combine this data tool, which is backwards looking by nature, with their forward-looking assessment of recent policy changes and government reshuffles.
Another notable development that Jupiter announced simultaneously with the launch of the Dynamic Bond ESG fund was the appointment of a dedicated ESG Director for Fixed Income. The new director, Anna Karim, who joined Jupiter in October from Federated Hermes, will work across Jupiter’s broad range of fixed income funds, with a particular focus on Dynamic Bond ESG, looking to promote strong stewardship practices within the team’s approach across the range. Karim has previously worked in investment banking for 20 years at, among others, Bank of America Merrill Lynch and Citi Group.
“Jupiter’s fund manager-led approach to stewardship differs by strategy and asset class. We believe that our managers are best placed to take the lead on stewardship, with ESG analysis at its most effective when integrated directly into their investment approach,” says Jahnke, commenting on Karim’s appointment. “As such, it is important to ensure that ESG expertise is fully embedded within our investment teams, and this is what has led to the introduction of the ESG Director role, which is being introduced across our key strategies,” he adds.
“As a high conviction, active manager of our clients’ money, we have a responsibility and an opportunity to effect change by engaging with and influencing the companies we invest in to adopt more sustainable businesses,” concludes Jahnke.