Kingswood launches ESG bond fund

Kingswood launches ESG bond fund
 Credit: Chris Ratcliffe/Bloomberg

Wealth manager Kingswood has launched a green fixed income fund to cater for an uptick in demand from clients looking for environmental, social and governance-focused options.

The Kingswood ESG Bond fund will be one of very few short-dated, actively managed, Sterling only, investment grade ESG funds in the market, and the wealth manager pledged it would provide “very liquid” exposure to the most competitive bonds around.

Nigel Marsh, associate director of fixed income at Kingswood, said: “We’ve seen a significant uptick in demand from clients looking to become greener in the way they invest. 

“While definitions of ESG vary, it is easy to see why investing into companies that have strong ESG scores are becoming so popular. 

“Those companies with higher ESG scores are defining best practice which in turn sets a level for others to strive to achieve.”

The fund targets a five-year duration and aims to provide income with the potential for long-term capital growth.

It will use the Bloomberg Barclays MSCI Sterling Liquid Corporate ESG Weighted Index — a fixed rate, investment grade, corporate bond benchmark which has returned 35 per cent in the past five years.

Taking constituents from the index, which weights on ESG considerations, the fund aims to be exposed to the most environmentally friendly companies.

The portfolio will also introduce a 20 per cent maximum weighting for any individual sector for diversification purposes while maintaining liquidity through daily pricing.

ESG investing has boomed in popularity in recent years as fears over climate change have led investors to consider the impact of their money and as a growing number of millennials have begun investing.

Recent data from Morningstar showed global assets in sustainable funds hit £1.21trn by the end of 2020, a record high, after investors pumped £111bn into such funds in the final quarter of the year alone.

Mr Marsh added: “We feel now is the opportune time to launch the Kingswood ESG Bond fund. 

“By using the [...] index, we are aligning our fund with the market leading ESG bond indicator and are excited to offer the investment to both our institutional and retail clients.”

Kingswood has been on a growth push for the past few years, securing a majority stake in a New York-based advice firm at the end of last year as part of its expansion plans in the US.

In the UK, it recently launched an advice academy designed to help aspiring financial planners looking to start or switch careers into the sector.

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