The Luxembourg-domiciled Sicav will invest in emerging market corporate bonds with a focus on the sustainability characteristics of issuers in the fund.
It will be managed by Charles de Quinsonas, supported by M&G’s head of emerging market debt Claudia Calich.
“The emerging market corporate bond market has seen rapid growth over the past 15 years, driven by the strong economic expansion across developing economies,” said de Quinsonas.
“We believe it remains an under-researched market, creating a wealth of opportunities for active credit selectors, with the expertise to assess the idiosyncratic risks. We see ESG analysis as being an important complement to traditional financial analysis, while allowing clients to align their investments more closely to their environmental and social value.”
Securities in the portfolio will favour issuers with strong ESG credentials when bond valuations are comparable with issuers with a weaker sustainability profile. Potential investments undergo a three-stage screening process.
This process screens out companies in breach of the UN’s Global Compact Principles. It also filters out issuers that derive their revenues from tobacco, alcohol, porn, gambling, thermal coal, nuclear energy, defence or weapons.
“Changing attitudes have helped to drive a steady increase in the number of responsible investment and ESG-related strategies over the past few years,” said M&G head of fixed interest, mutual funds, Jim Leaviss.
“Growth has been especially strong in the fixed income space although emerging market corporate bonds have remained an underserved part of the ESG landscape.
“By looking at emerging market debt through an ESG lens, the Fund provides a genuinely distinctive proposition for investors looking to gain exposure to the ever-growing and diversified emerging market corporate bond universe.”
In November 2017, M&G rolled out an ESG high yield fund co-managed by James Tomlins and Stefan Isaacs. This followed a global listed infrastructure fund, launched in September 2017 and managed by Alex Araujo, taking into account ESG factors.