The Ucits fund will be run by the firm’s co-head of credit Fraser Lundie (pictured) and head of fixed income Andrew Jackson, who joined Hermes in April last year from Cairn Capital where he was chief investment officer.
It will invest in investment grade, high yield, emerging market debt, convertible bonds, asset-backed securities and loans to target a return of Libor plus 5%.
Jackson emphasised the importance of flexibility and risk management at a fixed income manager’s disposal and said Hermes expects to “continue to utilise security selection and ESG as primary tenets of our approach”.
He added: “Future fund launches will seek to further diversify the underlying universe of global assets, extend the ability to deviate meaningfully from benchmarks, and to fully utilise the range of credit instruments as risk mitigation tools.”
In April last year Hermes published research that showed companies with the weakest ESG credentials tend to have the widest credit default swap (CDS) spreads, which means risker companies from a credit perspective tend to also be the worst from an ESG perspective.
