Alternative Investments/ESG: Morgan Stanley UK Launches Sustainable Fixed Income Opportunities Fund
The fund aims to provide income and capital growth over five years.
The Morgan Stanley UK Sustainable Fixed Income Opportunities fund will primarily invest in global fixed income securities issued by corporates and governments. It will integrate ESG considerations into the investing process.
Its portfolio will feature an assortment of investment grade, high yield, emerging market, convertible, securitized, and government bonds. (HedgeWeek)
The fund aims to generate risk no are to get-adjusted absolute returns using a selection process that emphasizes sustainability.
Accordingly, the portfolio will prefer the 80% strongest sustainability performers in each subsector of the Bloomberg Barclays Global Aggregate Index.
This Index is representative of the fixed-income securities in which the fund would prefer to invest.
Morgan Stanley UK Sustainable Fixed Income Opportunities fund
To ensure its ESG objectives the fund will not include companies based on certain sector-based and norms-based exclusions.
Therefore, issuers that generate revenue from weapons and firearms, or derive more than 10% of the revenue from tobacco, gambling, and fossil fuels, will not find a place in the portfolio of the fund.
“Our flexible approach to portfolio positioning allows us to adjust market exposure in line with the macroeconomic backdrop, as we seek to generate returns from a broad range of investment opportunities,” said Leon Grenyer, portfolio manager.
The fund does not track a benchmark. In this context, Grenyer said: “We utilize an active asset allocation process across the global fixed income opportunity set. As we are not tied to a benchmark, our investment decisions are not restricted by geographic and sector weightings.”
“We believe that a benchmark-orientated approach to investing in fixed income can be sub-optimal. This is because asset allocation driven by benchmark weightings can result in exposure to parts of the market that offer lower potential returns or greater risk. As such, an active and flexible investment strategy may be a better alternative and stand to outperform.”
Related Story: JPMorgan Launches Carbon Transition U.S. Equity ETF
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