Posted inSingapore

UOBAM launches ESG bond fund

UOB Asset Management (UOBAM) offers its first Singapore-focused ESG fund to help investors contribute to the nation’s sustainability drive.

The United Smart Sustainable Singapore Bond Fund invests in high-quality green, social, and sustainability-linked bonds with strong ESG mandates, according to the asset manager.

“Investing for profit and purpose is one of our key tenets at UOBAM. It is also the core motivation of our United Smart Sustainable Singapore Bond Fund. As we help steer capital to sustainable investments, we believe we can also help investors benefit from stable income and capital appreciation, so that they can realise both profit and purpose,” Thio Boon Kiat, group chief executive of UOBAM, said in a statement.

Available to retail investors in the Lion City, the fund will invest mostly in around 50 investment grade quasi-sovereign, real estate and financial sector fixed income securities.

The portfolio management team will look at opportunities where innovation and technology are being adopted to help create a sustainable city, and reduce the harmful impacts of climate change. Appropriate companies for inclusion in the fund must demonstrate sustainable production processes across their supply chain.

The investment approach of the fund is based on UOBAM’s proprietary ESG rating model. It combines ESG data from reliable third-party data providers, such as MSCI and S&P Global Trucost, with UOBAM’s independent analysis and materiality framework. The model also taps artificial intelligence and machine learning in the evaluation process, including the monitoring of companies’ news, to derive more robust ESG scores, according to the asset manager.

ESG dashboard

To help investors better understand the fund’s sustainability performance, UOBAM has also created an “online impact dashboard” that displays the portfolio’s quantitative ESG indicators. Examples include the overall ESG score measured against the JP Morgan ESG Asia Credit Index (JESG JACI), carbon intensity and reduction target, energy / water / waste intensity and supply chain environmental cost intensity.

The dashboard also shows investors the sustainability impact from the investments made through the fund in comparison with the JESG JACI. For instance, every S$1m ($742,640) of revenue generated by the fund equates to 86 megawatt-hours less in energy consumption compared with the index. The difference can be used to power 261 three-room HDB flats for one month, according to UOBAM.

As part of Budget 2021, the Singapore government announced it would finance up to S$19bn ($14.13bn) of public sector infrastructure projects through green bond issuances. Riding on the transition to a lower carbon economy and increased investor appetite, companies are also picking up the pace in implementing sustainable practices.

The demand for sustainability solutions is also rising among individuals with findings from the UOB ASEAN Consumer Sentiment Study showing nine in 10 people expect sustainable investments to become more common in the next three to five years.

The initial minimum subscription sum of United Smart Sustainable Singapore Bond Fund is S$1,000 ($742.6) or $1,000. The current distribution policy is to make regular monthly distributions of up to 2% per annum.

Management fees range between 0.25% and 0.45% (depending on the share class), and the fund’s distributors include UOB Kay Hian, UOB Bank, iFast/FSMOne and Philips Security/POEMS.

Part of the Mark Allen Group.