Edentree has introduced a strategy investing in government or government-related bonds funding projects that work towards carbon emission reduction or which create wider access to services providing community support.
The EdenTree Global Select Government Bond fund will target 80% exposure to government-focused green, social, sustainable, or impact bonds. David Katimbo-Mugwanya, head of fixed income, will manage the fund and will use EdenTree’s proprietary Oppressive Regime screen to remove countries that are identified as having an opressive regime. The screening process uses assessments from Freedom House, Transparency International, and the World Economic Forum to score countries on a range of criteria.
The fund will aim to offer regular income, payable quarterly. It joins the Edentree Responsible & Sustainable Short Dated, the Responsible & Sustainable Sterling Bond and the Global Impact Bond strategies in Edentree’s range of fixed income funds.
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“In its latest assessment of development investment around the world, the United Nations (UN) estimates that $4.2trn per annum is required to close the development financing gap, up from $2.5trn before the Covid-19 pandemic. Urgent steps are needed to address global sustainable development funding requirements, and governments have a unique ability to mobilise capital at scale through vast debt issuance programmes, placing them in a prime position to fund projects that tackle these societal challenges,” Katimbo-Mugwanya said.
“Sovereign ESG-labelled debt issuance is continuing at an unprecedented pace, with government and or related issuance making up just over half of the outstanding global universe of use-of-proceeds green, social and sustainable debt. In a market environment that offers considerably higher bond yields compared to the last decade, the risk-return profile of government debt from an asset allocation perspective has markedly improved. As such, we believe this new fund is ideally placed to leverage these market dynamics in the best interests of clients seeking to credibly enhance sustainable fixed-income offerings when allocating to government debt.”
James Tomlinson, head of wholesale distribution, added: “The EdenTree Global Select Government Bond fund has been developed in close partnership with an existing client to meet a specific strategic requirement for a sustainable government bond solution.
“Fixed income is playing an increasingly important role for investors seeking to link financial goals with the desire to address pressing societal needs and environmental concerns. While equities have traditionally dominated the options available for responsible investors, fixed income now provides innovative sustainable investment products with varying risk profiles, degrees of impact and competitive rates of return. With this in mind, we are delighted to further enhance our fixed income offering, providing our clients with greater flexibility and increased choice when it comes to meeting their investment and sustainability goals.”
