BlueBay has partnered with €1.9 billion Norwegian pension fund PKH and consultancy Mercer to establish a new high yield fund that incorporates ESG analysis.
The BlueBay Global High Yield ESG Bond fund will be a sister fund to the existing BlueBay Global High Yield Bond fund. It will be managed by Justin Jewell and Thomas Kreuzer, who are both co-heads of global leaveraged finance.
The investment strategy of the fund will incorporate the ESG investment policy of the Norwegian Government Pension Fund Global, the largest sovereign wealth fund in the world.
Launched following demand for greater incorporation of ESG into fixed income investment strategies, the new fund will offer investors a more dedicated ESG strategy.
Domiciled in Luxembourg, the new Ucits structure will be available for sale in Luxembourg, Norway and Switzerland.
The strategies encompass product-based screening on controversial weapons, tobacco and coal-based energy, as well as conduct-based screening, integration and engagement.
Commenting on the launch, CFO at PKH, Mariann Bendriss, said: 'We believe the incorporation of ESG into investing is important and relevant as such factors can have economic and investment impacts. Viewed in this way, ESG is good long-term risk management. In the process, we can also play a role in contributing to sustainable development, something which is also of interest to our beneficiaries.'
Chief investment officer at BlueBay, Raphael Robelin, added: ‘Fifteen years [after BlueBay was established], we believe we are facing the start of another important market development – the application of ESG investment strategies to the debt asset class.
‘The launch of this ESG offering illustrates BlueBay’s ongoing commitment, as a specialist fixed income manager, to incorporate ESG and demonstrate innovative and proven new approaches to investing across the asset class.’
The BlueBay Global High Yield Bond fund returned 12.07% in US dollar terms over the three years to the end of January 2017. This compares with an 11.80% rise, by its Citywire-assigned benchmark, the BofA Merrill Lynch Global High Yield TR, over the same time period.