London-based M&G Investments has launched a high-yield global bond fund that will incorporate environmental, social and governance (ESG) factors.
The strategy, to be co-managed by James Tomlins and Stefan Isaacs, will use a three-stage screening process to filter out firms in breach of the United Nations’ Global Compact principles and companies that derive revenue from tobacco, alcohol, adult entertainment, gambling, coal, defence and weapons.
At least 80% of the fund is invested in high-yield bonds issued by companies located in any country, including emerging markets, which may be denominated in any currency.
The fund may also invest in bonds issued by governments, investment-grade corporate bonds, asset-backed securities, cash and assets that can be turned quickly into cash.
Tomlins said: “Using our expertise in credit analysis, we have built a diversified high-yield portfolio which applies an ESG screen to the global high-yield market in a consistent and measurable way.
“Focusing on negative screening and ESG integration, the fund strikes the right balance between being able to express investment views and responsible investing outcomes.”
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