Specialist fixed income manager, BlueBay Asset Management (BlueBay), has launched a strategy which enables fixed income investors to allocate for positive impact by investing in liquid public debt markets.
The BlueBay Impact-Aligned Bond Fund looks to invest in issuers that make a positive contribution to people and the planet, while also seeking to deliver attractive returns.
The new sustainability-themed UCITS fund, which is categorised under Article 9 of the Sustainable Finance Disclosure Regulation (SFDR), offers investors an accessible opportunity to invest positively in fixed income. Until now, investment in this space has largely been limited to green bond funds, or more illiquid impact investment strategies. As such, BlueBay expects the fund to appeal to both institutional and wholesale investors looking to align their fixed income investment allocations with their Environmental, Social, and Governance (ESG) objectives.
The primary focus of BlueBay’s new fund is on those companies whose core economic activities offer investment opportunities and contribute to addressing global environmental and social challenges like climate change and inequalities, framed around seven sustainability themes. The fund offers daily liquidity and will predominantly invest in developed market investment grade corporate bonds, as well as some high yield and emerging market bonds.
Investing in the fund at launch is Tribe Impact Capital, a leading impact wealth manager. Its Chief Impact Officer, Amy Clarke says: “We’re pleased to support BlueBay in the launch of their Impact-Aligned Bond Fund. This innovative strategy builds on BlueBay’s growing commitment to sustainable investing and we’re thrilled to see them bringing their successful track record in credit to the impact arena. We hope this demonstrates to both the market and investors that a focus on responsible and sustainable business can contribute to and enhance the credit selection process.”
Partner and Senior Portfolio Manager, Tom Moulds will be responsible for the management of the fund, as well as BlueBay’s Head of ESG Investment and Portfolio Manager, My-Linh Ngo and Portfolio Manager, Harrison Hill.
Moulds says: “To invest thematically, manage risk and focus on delivering strong investment returns, we have enhanced our approach to portfolio construction. Starting by broadening out the fund’s scope to include a global universe, we then dropped the constraints of being tied to a benchmark. Ultimately, we’re focussed on finding companies that provide solutions to our sustainability themes whilst offering attractive valuations, and this flexible approach to investing allows us to do just that.”
My-Linh, says: “We’re excited to be innovating new ways for our clients to invest in fixed income. To date, this style of investing has largely been limited to listed equities. Widening this opportunity set to fixed income is critical from a sustainability perspective. For one, the absolute size of the debt market dwarfs that of equities, so in our view if you want to make an impact you need to think beyond stocks alone. Furthermore, we see many of the activities that need to be financed to enable the sustainability transition are going to be more attractive to fixed income investors rather than equity.”
The launch of this new fund, as well as two ESG sister funds to BlueBay’s existing, conventional investment grade funds, the BlueBay Investment Grade ESG Bond Fund and the BlueBay Absolute Return ESG Bond Fund, adds to the range of ESG-focussed strategies BlueBay offers, which go beyond the standard ESG integration approach applied for all managed assets. Both will be categorised under Article 8 of SFDR.
All three funds have an approach based on a significantly engaging methodology as per the French AMF position. Under the German requirements, the BlueBay Impact-Aligned Bond Fund is categorised as “Impact” and the BlueBay Investment Grade ESG Bond Fund and the BlueBay Absolute Return ESG Bond Fund are under the “ESG” category.
