Edinburgh-based fixed income manager Cameron Hume is to launch a new global bond fund for investors seeking to manage effectively the environmental, social and corporate governance (ESG) exposures of their fixed income investments.
The Cameron Hume Global Fixed Income ESG Fund will offer investors the potential to achieve active returns from a portfolio of bonds with higher average ESG ratings than their respective sectors.
The company has integrated ESG factors into its investment processes. The fund is an actively managed, globally diversified portfolio of up to 400 fixed income securities from issuers who can demonstrate that ESG risks are appropriately managed.
The fund aims to outperform the Bloomberg Barclays Global Aggregate Index.
The fund – a UCITS vehicle domiciled in Dublin – was developed in response to a growing demand among investors for an ESG fixed income offering and will launch with assets of USD100 million.
Co-founder and Chief Investment Officer Guy Cameron (pictured), says: “ESG strategies are more well-established in equity investing, and investors are now looking to include ESG considerations in their allocations to fixed income strategies.”
“This actively managed fund is designed to be part of a core allocation to global fixed income but will favour bonds issued by corporates with superior ESG ratings. So it is a ‘returns-based’ rather than a ‘values based’ approach that offers asset owners the opportunity to make an immediate improvement in the management of ESG exposure for their fixed income allocation. The fund will be distinctive in that we will report ESG exposures transparently using MSCI ESG ratings.”
The fund will be relevant to institutional investors, discretionary fund managers and wealth managers in the world’s developed markets including the UK, Europe and Australia, where Cameron Hume’s networks are principally located, as well as in the United States and Asia.
The fund comprises instruments from issuers believed by Cameron Hume to manage their ESG exposures better than their peers with an overlay of active positions drawn from a global opportunity set in rates, currency, inflation and credit markets.
The fund will exclude issuers involved in the production of controversial weapons or countries that are subject to UN, European Union or United States sanctions.
The company has been able to integrate ESG risk factors into its investment process using an advanced proprietary suite of analytical tools known as CaTo (Cameron Hume Tools), which stores a wide range of data on individual fixed income instruments (including ESG data) as well as a broad range of market and economic data in a single database.
Cameron says: “By using CaTo we are able to value individual corporate bonds within industry sectors and use third party ESG ratings to evaluate the potential quality of over 3000 investment grade and high yield bonds. This process enables us to identify the best ESG rated bonds within each sector as a starting point for possible inclusion within the fund.”
