Brandywine impact bond fund launches in the UK

Called the Brandywine Global Multi-Sector Impact fund, the fund aims to cater for investors who want to help make a difference with their investments.

Managed by a team including William Vaughan, associate portfolio manager, the Ucits fund aims to help the transition to a sustainable and equitable economy.

This fund aims to provide capital and expert guidance to those issuers most in need of improvement.William Vaughan, Brandywine Global

This will be done by investing in, and engaging with, fixed income issuers that have potential to materially improve their environmental and social practices.

According to Vaughan: "Rather than excluding whole industries from our investment universe, this fund aims to provide capital and expert guidance to those issuers most in need of improvement, in areas like biodiversity preservation, workforce equity and safety, and renewable power.

"Consequently, we expect a substantial portion of the impact from our portfolio will come from active engagement with companies in industries that may be overlooked by other funds."

The fund is a sub-fund of the Irish domiciled fund range. 

Vaughan said the management team believes the biggest sources of alpha for this fund will come from sector rotation and duration and quality management in addition to potential spread tightening as ESG risks reduce.

He said: "Risk management enhancements should be supported by Brandywine Global’s ESG and impact-orientated approach and improvements in ESG metrics as a result of increased engagement.”

For example, the industrials, materials, energy and utilities sectors, are the four highest emitters listed in the Bloomberg Aggregate Corporate Bond Index.

If investors exclude these instead of engaging with companies involved in 84 per cent of the emissions in the index, they could be excluding themselves from 25 per cent of the market value of the index.

Therefore, Vaughan added the new fund seeks "to influence better sustainability practices across a wide spectrum of industries, through engagement and positive impact".

The strategy also brings together a team with sector experience in global sovereigns, corporate and structured credit, emerging markets, and currencies.

simoney.kyriakou@ft.com