The Sustainable Reserve Fund is Singapore-based Phillip Capital Management’s first fund which fully-integrates environmental, social and governance (ESG) factors into its investment process and objectives.
It is supported by a proprietary ESG-integrated investment framework, according to the company. This is intended to enable the fund manager to identify issuers that are well-positioned to succeed financially from their committed actions that help to “address the most pressing planetary concerns”, it added.
The fund will focus on fixed income instruments from borrowers who are committed to sustainability and that also contribute in specific ways to a “green economy”.
At least 70% of its assets will be fixed income instruments from issuers meeting industry-specific ESG criteria through positive screening and active management. The portfolio manager can also buy ESG-labelled bonds.
The fund’s ESG focus aligns with the Disclosure and Reporting Guidelines for Retail ESG Funds issued by the MAS.
However, the fund’s primary investment objective is to generate income yields greater than the 6-month Singapore Overnight Rate Average (SORA).
Investments will include global fixed income, including short-term interest-bearing debt, bonds, money market instruments, and bank deposits. These may be issued by governments, government agencies, companies, and supra-nationals.
The fund is designed as a short-duration bond fund which aims to pay dividends quarterly (up to 2% a year) and employs a diversified investment approach, with no specific industry or sectoral emphasis, according to Phillip Capital.