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Presenting the EdenTree Global Impact Bond Fund
FOR PROFESSIONAL INVESTORS ONLY
In this Fund in Five, we look at the fund from five angles to see how the managers can achieve this aim, while at the same time delivering competitive financial returns.
On January 24, EdenTree Investment Management announced the launch of the EdenTree Global Impact Bond (GIB) Fund. Managed by David Katimbo-Mugwanya and Michael Sheehan, the fund aims to generate a positive societal impact by investing in a global set of ‘impact orientated’ fixed income instruments.
AUM
£324M
Fund size
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By mobilising capital towards projects that address these societal challenges, David Katimbo-Mugwanya, says impact investing bridges this funding gap and avails a credible means to advancing a sustainable future in a just and inclusive way.
Meanwhile according to the International Energy Agency (IEA), to achieve net zero carbon emissions by 2050 requires approximately $4trn in clean energy transition-related investment per year.
“The investment universe is truly large and global,” says Katimbo-Mugwanya. “Over the last year we have seen $1trn in issuance in green, social and sustainable debt, which is nearly double that of the year before and it has grown over recent years.”
According to the International Monetary Fund (IMF), an estimated $2.1trn is needed to achieve the United Nation’s 17 Sustainable Development Goals (SDGs) in emerging market economies by 2030 in areas such as education, health, electricity, roads, water and sanitation.
To achieve its aim, the fund invests in a diverse mix of principally ESG-labelled green, social and sustainable bonds with use-of-proceeds provisions.
Unearthing the hidden gems
The fund’s investment focus is on global and investment grade bonds, with a minimum 80% portfolio exposure to impact instruments.
The core philosophy of the EdenTree Global Impact Bond Fund is to generate positive societal and environmental impacts, alongside competitive financial returns.
Katimbo-Mugwanya says this dual-objective mandate requires an integrated investment approach combining in-depth fundamental financial analysis with robust assessment, measurement as well as management of the underlying issuer’s impact.
Katimbo-Mugwanya says: “Currently the portfolio is invested in 50 issuers, but this is expected to grow over time with the scaling of the fund. Overall, we are looking for a diversified portfolio across issuers, sectors, currencies and themes.”
The fund’s investment universe also encompasses general purpose debt issued by entities whose products or services offer tangible solutions to the world’s most pressing challenges, guided by Edentree’s impact pillars of: Sustainable Solutions, Social Infrastructure, Health & Wellbeing and Education.
As a company with over 30 years of experience managing sustainable and responsibly-invested funds, Katimbo-Mugwanya says the uniqueness of the GIB fund is much the result of EdenTree’s heritage.
Fund dividend yield
*Dividend yield based on trailing 12 month distribution divided by the latest NAV. Source: RWC, FactSet (using GICS Sector Classifications via MSCI). All data as at 30th April 2021.
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“There are a number of global impact bond funds that are coming to market,” he says. “However as pioneers in the responsible and sustainable space, we feel those players don’t have as much heritage as Edentree in assessing the impacts that the issuers generate whilst they are achieving these positive objectives.”
Katimbo-Mugwanya says these four factors are fundamental to ensuring the fund can deliver real world positive impact.
Impact credentials sit at the heart of the fund’s investment process with issuers assessed on four key criteria; Intentionality, Contribution, Measurement and Responsibility.
The fund also commits to providing transparency on the outcomes of its investments via annual carbon footprinting and impact reporting.
Sheehan joined the EdenTree fixed income team in 2021 and is responsible for co-managing the group’s responsible and sustainable fixed income strategies, including the Global Impact Bond Fund. He joined from Aberdeen Standard, where he assisted in managing European investment grade credit funds.
Fund managers Katimbo-Mugwanya and Sheehan have 20 years’ combined investment experience within fixed income.
Katimbo-Mugwanya joined EdenTree in 2015 and possesses over a decade of investment expertise across sovereigns, corporate debt and money markets. He leads the group’s responsible and sustainable fixed income strategies, including the Sterling Bond Fund and the Short-Dated Bond Fund.
Supported by
analysts
Rather than purely outsourcing ESG research to an independent team, Katimbo-Mugwanya and Sheehan also work alongside EdenTree’s Responsible Investment team to ensure that ESG is truly embedded within their investment process.
Past performance is not a reliable indicator of future results.
Source: Federated Hermes as at June 2020. Performance presented in Euros for the F EUR Acc share class, net of fees and charges. Fund inception: 11 May 2010. Benchmark: ICE BofA Merrill Lynch Global High Yield Constrained EUR Hedged.
EdenTree launched one of the first ethical funds in the UK back in March 1988, making them one of the original responsible investment houses.
“We have a strong 30-year track record of responsible investment which entails delivering performance with principles,” says Katimbo-Mugwanya
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Today the group run £3.7bn of assets under management across its range of funds.
“We are very aware of the materiality of ESG risks and how these are integrated in the companies we invest in, while we are also strong at engaging with these companies and catalysing change from a positive impact perspective,” he adds.
FIND OUT MORE
Find out more: https://www.edentreeim.com/funds/funds-in-focus/edentree-global-impact-bond-fund
The views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest. The value of an investment and the income from it can fall as well as rise, you may not get back the amount originally invested. Past performance should not be seen as a guide to future performance. EdenTree is authorised and regulated by the Financial Conduct Authority and is a member of the Investment Association. Firm Reference Number 527473.
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