JP Morgan Asset Management (JPMAM) has registered its Global Bond Opportunities Sustainable Fund for sale to retail investors in the Lion City.
The Luxembourg-domiciled Ucits fund invests in sustainable debt securities which JPMAM believes are issued by companies and countries that show effective governance and superior management of environmental and social issues.
The timing of the registration in the Lion City was precipitated in part by the Monetary Authority of Singapore’s (MAS) recently proposed environment risk management guidelines, which include encouraging asset managers to incorporate environmental considerations into their product offerings, introduce processes to manage and disclose environmental risks.
Sherene Ban, JPMAM’s Singapore and south east Asia chief executive, told our sister publication Fund Selector Asia: “Coupled with MAS guidelines, there has been an increasing awareness of sustainable investing, and hence many of our key distributors have been focusing on sustainable investing/ESG as a theme, similar to trends witnessed globally.
“There has been a general perception among retail clients that sustainable funds imply sacrificing returns, but our Global Bond Opportunities Sustainable Fund has not compromised on performance, especially during the sell-off in March, which has re-assured many of them.”
Performance
The fund was first launched in Europe last November and has since earned a 5.24% return, compared with an average return of 4.03% by global fixed income products available in Singapore, according to FE Fundinfo.
Although the nominally unconstrained fund has underperformed its benchmark, the Bloomberg Barclays Multiverse Hedged (EUR), which is up 12.38% during the period, it is more stable, with an annualised volatility of 7.80%, compared with 13.47% for the index, FE Fundinfo data shows.
The fund has an average yield of 2.5% and a duration of 5.2 years, and is comprised of a 65% weighting to investment grade credits. Although 49% is allocated to corporate bonds, most of the portfolio’s top 10 individual holdings are sovereign or state-backed credits, including Sweden and Australia, but also China, Indonesia and Cyprus.
Criteria
The fund has six co-managers and although it is JPMAM’s first publicly available product with an explicit ESG mandate, “100% of its global fixed income AUM are ESG integrated”, according to the firm.
Bond selection combines “norms- and values-based exclusions and a deliberate positioning to securities issued by companies and countries that meet the fund managers’ ESG criteria,” said Travis Spence, fixed income investment specialist at JPMAM.
“In the bond market, investors started by first focusing on the integration of ESG factors into investment decision making, in order to ensure that material risks to cash flows were being considered,” he added.
“The market has now moved towards a dual focus on selective exclusions to help ensure portfolios match investor values as well as concentrating on securities that demonstrate superior sustainable characteristics.”
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