Northern Trust Asset Management (NTAM) writes that it continues to expand its sustainable investment solutions with the launch of two global bond ESG funds and the corresponding indices, built in partnership with German index provider Solactive.
The NT Global Bond ESG Climate Index Fund and the NT Global 1-5 Years Bond ESG Climate Index Funds target issuers that the portfolio managers believe are better positioned to manage financially material environmental, social, and corporate governance (ESG) risks and a transition to a low carbon economy. The firm writes that in order to improve the ESG profile and reduce the carbon intensity of a fixed income portfolio, both of the funds apply distinct ESG approaches; one to corporate bonds and another to government bonds. The strategies leverage the same investment process but have different duration targets, the firm writes, giving investors the flexibility they need when managing bond portfolios in a rising interest rate environment.
Marie Dzanis, head of NTAM in EMEA, says: “We’re delighted to build on more than 30 years of experience in managing socially responsible portfolios, and combine it with our robust fixed income capabilities, to meet investors’ demand for ESG investment solutions that move beyond equity. At NTAM, we believe investors should be compensated for the risks they take – in all market environments and, as we see investors increasingly look to integrate sustainability characteristics into their bond portfolios, we have partnered with Solactive to offer strategies that we believe are a compelling solution to meet their needs.”
Timo Pfeiffer, chief markets officer of Solactive, comments: “In Partnering with NTAM, we designed indices that may offer suitable ways to diversify portfolios in all market environments with indices that target high sustainability standards. This demonstrates our expertise in incorporating cutting-edge exclusion standards into our fixed-income indices, taking us to the next level in sustainable investing. We are pleased to establish this partnership with NTAM.”
The NT Global Bond ESG Climate Index Fund and the NT Global 1-5 Years Bond ESG Climate Index Funds, used as benchmarks for the strategies, measure the performance of a global investment grade bond universe and integrates ESG scores and climate data into the government and corporate bonds within the index. Customised and using a broad-base universe consisting of around 25,000 bonds, the indices include bonds issued by central governments, government-related issuers, corporates, as well as securitised debt instruments, issued by both developed and emerging markets in accordance with Solactive’s Bond Market Classification framework. The Solactive Global Bond ESG Climate Index represents the full maturity curve; with the Solactive Global Bond 1-5 Year ESG Climate Index representing shorter maturity.
The NT Global Bond ESG Climate Index Fund and the NT Global 1-5 Years Bond ESG Climate Index Funds are available in Ireland, Denmark, Finland, Luxembourg, Sweden, UK and Netherlands.