British asset manager M&G and Swiss impact asset manager responsAbility are unveiling a new sustainable corporate bond strategy.
The M&G responsAbility Sustainable Solutions Bond Strategy, classified as an SFDR Article 9 fund, emerges in response to the burgeoning demand from institutional and wholesale investors for actively managed sustainable fixed income solutions.
The reason for this partnership stems from a shared commitment to foster sustainable investment practices. By combining M&G’s robust credit expertise with responsAbility’s proven impact and sustainable investing track record, the strategy aims to construct a diversified portfolio of global investment grade bonds that drive positive change across various sectors including health, education, social inclusion, circular economy, environmental solutions, and climate action.
M&G boasts a formidable global fixed income division managing assets worth €161 billion. The firm will leverage its deep credit analysis capabilities to select bonds that not only provide financial returns but also contribute positively to the environment and society. responsAbility, on the other hand, brings its extensive experience in impact investing to the table, acting as the Investment Adviser. They will ensure the fund’s investments align with sustainable themes and provide additional insights to support M&G’s research efforts.
Further insights into the partnership reveal that investments will target two main types of bonds. These include project financing bonds like green or sustainability bonds that fund specific environmental or social projects, and bonds issued by businesses actively addressing environmental or social challenges through their core operations.
Since the issuance of the first corporate green bond in 2013, the ESG bond market has expanded significantly, with $306 billion issued in the first three quarters of 2024 alone, making up 23% of the total corporate bond supply in the European investment grade space.
Neal Brooks, global head of product and distribution at M&G, expressed his views on the strategy. “This strategy is testament to M&G’s ability to combine its capabilities to create unique investment solutions that play to our strengths in active fixed income and responsAbility’s market-leading impact credentials. The M&G (Lux) responsAbility Sustainable Solutions Bond Fund has been tailored to meet demand from pension funds, insurance companies and wholesale investors in Europe looking to align active public fixed income portfolios to positive change.”
Fund manager Mario Eisenegger also shared his perspective. “One of the most effective ways for bond investors to contribute to the Sustainable Development Goals is by directly funding environmental and social projects and providing financing to businesses that make a meaningful, positive contribution to the planet or society through their underlying business models. This fund does exactly that, giving the team a clear mandate to be laser-focused on these urgent priorities when putting our clients’ money to work.”
Stephanie Bilo, chief client & investment solutions officer at responsAbility, commented on the collaboration. “As pioneers in impact investing and with a solid 20-year track-record in delivering for our clients and societies in emerging markets, we know how crucial it is for investors to make sustainable decisions among the myriad of options available.
“We’re very pleased to join forces with M&G’s fixed income team for the first time, capitalising on the strength of our climate research capabilities and contributing to the sustainable focus of the portfolio. This is a great opportunity to combine our expertise and deliver to institutional and wholesale clients alike.”
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