Royal London Asset Management has launched a Sustainable Short Duration Corporate Bond Fund, adding to its Sustainable Investment fund range.
The fund is employing a high-conviction, actively managed approach underpinned by proprietary, bottom-up research, and provides investors with access to a diverse set of sustainably minded borrowers across a variety of economic sectors.
The fund assesses the Environmental, Social and Governance (ESG) profile of bonds whose expected duration is 2.5 to 3 years.
Royal London said while the sustainability of a potential bond is rigorously assessed, returns are further underpinned by prioritising issuers offering additional bondholder protections wherever possible, reducing potential exposure to downside risk.
The fund also has exposure to shorter duration assets, thereby limiting the portfolio’s sensitivity to interest rate changes.
The fund looks to offer investors an attractive yield and access to a variety of socially impactful sectors that are often out of reach of public equity investors, such as charities, government agencies or privately owned businesses.
These exposures extend from social housing charities providing affordable rents to those in need, to utilities playing a vital role in the energy transition. The fund also lends to a range of community funding banks, with strong franchises in mortgage and SME lending as well as Insurers, offering protection products.
The fund is managed by Shalin Shah, senior fund manager, and Matt Franklin, fund manager, members of RLAM’s market-leading Sustainable Investment team, and is further supported by the insights of an independent External Advisory Committee.
Commenting on the fund, senior fund manager Shalin Shah said: “The increasingly important role of sustainability on corporate agendas offers investors opportunities to access assets that can meaningfully contribute to both their return objectives and sustainable goals. We believe our approach, focusing on high quality, short duration assets, offers an attractive solution for investors seeking new sources of yield within a robust portfolio able to minimise exposure to downside risks.”
