M&G has launched an ethical sustainable governance (ESG) fund to invest in high yield bonds.
The fund will “screen” the potential investments to ensure they conform to those ethical principles.
The first stage excludes companies in breach of the United Nations Global Compact principles.
The second layer filters out companies that derive their revenue from specific sectors: tobacco, alcohol, adult entertainment, gambling, thermal coal, defence and weapons.
The third stage filters companies according to their ESG credentials based on ratings provided by MSCI.
The fund will also exclude any companies that are classified as industry laggards displaying poor ESG credentials compared to industry peers.
The fund will invest 80 per cent in global high yield bonds, and will invest globally.
Graham Mason, chief investment officer for M&G equity, multi-asset and retail fixed interest, said: “The fund aims to provide a solution for those investors looking for higher yielding strategies in the fixed income space while incorporating responsible investing criteria.
"Investors’ attitudes towards responsible investment and demand for ESG solutions have evolved significantly in recent years."
Patrick Connolly, head of communications at Chase De Vere, said: “Environmental, social and governance factors are becoming increasingly important and M&G is one of the investment companies which is advocating this approach.
"M&G has undoubted strength in fixed interest and this fund has the potential to perform well, although they already run many fixed interest funds including a Global High Yield Bond fund.”
david.thorpe@ft.com
