HSBC Asset Management (HSBC AM) has launched the HGIF Global Emerging Markets Corporate Sustainable Bond fund. The fund will be overseen by L. Bryan Carter, Head of Emerging Market Debt and managed by Caroline Keany and Julio Obeso, Senior EM Corporates Portfolio Managers. Finnish pension insurance company Varma, has made an initial investment of USD50 million into the fund.
The fund aims to make a positive environmental, social and governance (ESG) impact, by investing in fixed income (e.g. bonds) and other similar securities issued by companies that are domiciled in emerging markets and contribute to UN Sustainable Development Goals (SDGs). The fund will be classified as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR).
The strategy will integrate sustainability objectives into its analysis, alongside continuous engagement and a focus on driving positive change through proprietary engagement. Following a bottom-up investment process individual issuers will be selected based on HSBC AM’s Sustainability Assessment that will target the areas that require the most attention in terms of the individual company’s sustainability challenges.
This will result in a high-conviction, low turnover portfolio which aims to ensure robust sustainability standards within emerging markets. If a company is unable to improve the sustainability of its operations in line with its objectives and demonstrate measures to improve its sustainability, the investment will be divested.
Bryan commented: “Emerging markets are at the epicenter of sustainable investing, a just transition and Paris alignment. As investors, we believe direct and consistent engagement with emerging market issuers can offer opportunities for assessing their ESG plans and progress, their challenges and gaps, and to help drive positive change.”
Petri Ala-Härkönen, Head of FICC, Varma added: “The fund’s investment strategy complements our emerging markets portfolio from a diversification perspective, given that it is mostly made up of government bonds. The new fund invests in corporate bonds and takes careful consideration of the related sustainability aspects and therefore deepens the consideration of sustainability as part of our emerging market investments.”
This fund follows the launch of a suite of SFDR Article 8 funds in 2021 from the Emerging Market Debt team, with over USD300 million now managed between ESG Hard Currency and ESG Local Currency funds.
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