Swiss investment bank UBS has joined forces with Federated Investors and Hermes Investment Management to launch new fixed income impact funds, called the SDG Engagement High Yield Credit funds.
According to UBS, the funds will look to achieve a substantial social and/or environmental impact along with an attractive return through investments in high yield bonds and by engaging with their issuers.
The SDG Engagement High Yield Credit funds will have a dedicated lead engager to bring in positive change conforming to the United Nations Sustainable Development Goals framework.
UBS said that a UCITS fund, managed by Hermes Investment Management, will be on offer to investors across the world. Apart from that, a mutual fund will be available in the US which will be advised by Federated Investment Management with sub-advice from Hermes Investment Management, and with Federated Securities handling the distribution.
Last year, Federated Investors, the parent firm of the adviser and distributor, acquired majority stake in UK-based Hermes Fund Managers, the operator of Hermes Investment Management.
Hermes Investment Management chief executive Saker Nusseibeh said: “Having consistently advocated for stewardship to be at the core of investing, we have been encouraged to see the recent shift in industry standards.
“Now is the time for fixed income markets to take heed and for all stakeholders to fulfil their potential as sustainable investors. The UN SDGs provide a valuable framework for engaging to create more impactful and successful companies.”
UBS said that the funds are the first it has launched with the companies simultaneously to an international investor base.
UBS to make funds available through its platform to US and non-US clients
The Swiss investment bank will make the funds available via its platform to both US and non-US clients. UBS Global Wealth Management will make the funds available on its platforms starting from next month.
The funds will be a part of the bank’s $5bn (£4.07bn) commitment to SDG-related impact investing. The Federated Hermes SDG Engagement High Yield Credit Fund, which is initially being marketed in IS shares, has been launched for US investors.
The fund is also managed by Reznick and Lundie.
Apart from diversifying the sustainable and impact investments of the clients, the newly launched SDG Engagement High Yield Credit funds will look to support major sustainability initiatives spread across the financial services industry. Included in these are UN-backed Principles for Responsible Investment and the IFC’s Operating Principles for Impact Management.
UBS Global Wealth Management chief investment officer Mark Haefele said: “Investors must understand companies’ sustainability issues on every level as they strive to maximize their returns as well as their support for sustainability goals. Engaging with firms as issuers of debt as well as equity is an important new step on this journey.”
