The Bondyield ESG fund (environmental, social and governance) is managed by the firm’s UK managing director Tatjana Greil Castro who focuses on companies that best manage not just their economic performance but also their social and environmental impact.
The minimum average rating of the fund is investment grade, with no purchases below B. It covers a minimum of 15 sectors and 75 issuers, and no issuer will represent more than 3% of the fund. It invests only in cash-pay bonds with no structured products, distressed situations or zero coupon bonds.
The fund screens out companies that its independent advisers consider to be in violation of UN-defined ethical standards around employment, human rights, the environment and corporate governance.
Castro said: “Traditionally ethical investors have focused on equity investments, but they should be able to apply their principles across the whole of their portfolio into fixed income investments too. Money talks, and a CEO is just as likely to listen to the lender as the shareholder.
“There is a strong investment case for applying issues like sustainability to fixed income. In many sectors it is the firms with the strongest environmental, social and governance credentials that are most likely to be able to generate cash and pay back debt, which is fundamentally important.”
Minimum investment is £75,000, though Muzinich said it welcomes the opportunity for adviser groups and wealth management firms to pool investor contributions. It will have accumulation and income share classes with dollar, euro-hedged, sterling-hedged and CHF-hedged units. The firm will hedge currency exposure on a rolling three-month basis.
This follows the recent launch of Muzinich’s Short Duration Yield Fund, launched in late October, which is targeting a gross return of between 5.5% and 6.5%.
