Union Bancaire Privee – one of Switzerland’s largest private banks – has announced the launch of a new emerging market fixed income strategy which considers several ESG factors.
The new UBAM EM Sustainable Local Bond strategy invests in debt issued by sovereign entities and supranational borrowers, such as the Asian Development Bank.
Philippe Lespinard, head of asset management and alternative fixed income at UBP, stressed the importance of the new strategy, which he described as a unique approach to emerging market local-currency debt investing.
In a media statement, he said: “This strategy is an important achievement for our emerging markets fixed income team who have worked hard to develop a proprietary ESG and risk model in sovereign debt.
“This unique approach to EM local-currency debt, which combines risk parity with a focus on sustainability, ensures better diversification and risk-adjusted returns over time. Recent events have validated this approach, as we have excluded Russian government bonds from the portfolio since the strategy’s inception.”
This actively-managed strategy aims to achieve a solid yield and good returns from local currency emerging market debt.
UBP’s investment team will aim to minimise risks emerging from asset allocation and those existing at issuer level. Lespinard said the investment approach will combine risk parity with a focus on sustainability.
His colleague, Lamine Bougueroua, the lead portfolio manager for the UBAM EM Sustainable Local Bond Fund, explained that emerging market central banks have pre-emptively tightened their monetary policies in recent weeks.
“We believe investors stand to benefit from very high yields and currencies with sounder long-term fundamentals. With this strategy, we are also excited to present our clients with the opportunity to contribute to the essential financing needed to achieve climate transition goals and to deliver social improvements for a more sustainable economic model in emerging markets,” Bougueroua said.
© 2022 funds europe
