Newton launch adds to limited ethical bond fund options

Newton Investment Management has launched a rival fund to the limited selection of ethical options in the Sterling Strategic Bond sector.

Newton launch adds to limited ethical bond fund options

The Newton Sustainable Sterling Bond fund is the third sustainable fund launched by the boutique asset manager this year, following the Sustainable Global Equity fund, launched in January, and the Sustainable Real Return fund, launched in April. There are 82 funds in the sector.

The Newton fund will be co-managed by Howard Cunningham (pictured) and Scott Freedman.

The £130.8m Edentree Amity Sterling Bond and £556.4m Royal London Ethical Bond funds are the only existing products in the sector, according to FE Analytics.

Both have delivered returns above the sector average over one, three and five years.

Sterling Strategic Bond sector ethical fund performance

6m1yr3yr5yr10yr
EdenTree Amity Sterling Bond0.33%3.77%11.89%24.69%81.63%
Royal London Ethical Bond0.45%1.83%14.59%27.75%84.49%
IA Sterling Strategic Bond-0.32%1.14%9.57%17.80%62.19%

Newton chief commercial officer Julian Lyne said sustainable companies optimise their resources to the benefit of bondholders and shareholders.

Lyne said their ESG analysis identifies companies, which incorporate sustainability into their core business and strategy.

At the end of Q1 2018, Newton managed £2.6bn under an ethical mandate.

The fund will invest in government and public securities, plus corporates with sustainable business practices. It can invest up to 50% in high yield and more than 35% can be allocated to gilts.

Newton’s responsible investment team can veto securities based on ESG factors.

However, the fund will not invest in companies with more than 10% of turnover coming from tobacco production or sales. Companies that fail to meet the UN Global Compact Principles or the principles of a ‘2-degree’ world will also be excluded.

It will also avoid companies that have unresolvable ESG-related risks.

Newton is targeting institutional, retail and charity clients.

 

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