The fund is labelled as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation, which means it promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
The strategy aims to maximise returns within the high yield universe through conviction-based investing in sustainable companies from around the world, according to the company.
“By investing in a portfolio of sustainable companies, we aim to reduce the number of potential defaults and maximise total return. We believe that companies that manage their ESG risks effectively will be able to reduce their financial risks,” said Lila Fekih, co-portfolio manager of the New Capital Sustainable World High Yield Bond Fund.
Aside from Fekih, the fund is also managed by fellow New Capital’s fixed income team member Mark Remington.
The fund is available to accredited investors in Singapore.
During its investment process, the managers define a sustainable company as one which manages its ESG risks effectively or has a positive trajectory in addressing ESG challenges to protect or enhance its financial profile.
Methodologies
The team uses two proprietary valuation models, which assess the price of a bond and the probability of default.
It also conducts in-depth analysis to assess a company’s vulnerability to ESG risks, financial implications of such risk, and its strategy to address the risks and capitalise on opportunities generated.
This analysis aims to understand the current ESG risks faced by the company and how the future ESG trajectory impacts credit worthiness, said the asset manager.
Apart from working with the fixed income team, the co-managers also collaborate with the in-house ESG team and macroeconomic research colleagues that provide systematic and qualitative inputs to the investment process.
As of June 2021, Swiss-based EFG Asset Management has $31bn of assets under management.
