PGIM Investments has launched a global corporate ESG fund, which will be “the first of a newly-created suite” of PGIM Fixed Income’s ESG UCITS strategies available to investors outside of the US.
The PGIM Global Corporate ESG Bond fund, which was seeded with $25m of assets under management and is headed up by PGIM Fixed Income's Edward Farley, will be benchmarked against the Bloomberg Barclays Global Aggregate Corporate Total Return index. However, it will incorporate PGIM Fixed Income's own ESG rating framework as an overlay, which assigns a rating to every issuer.
The ratings are devised by a team of 110 analysts and are overseen by the firm's ESG committee.
Within this framework, the fund will invest in a combination of investment-grade and high-yield corporate bonds and quasi-sovereign bonds from across the globe, which will be denominated in US dollars, euros, yen, sterling or emerging market currencies.
Manager Farley, who also runs the firm's PGIM Global Corporate Bond fund, said: "As a fundamental research-focused manager, we fully recognise the importance of integrating ESG factors in our global investment research, decision making and portfolio management and believe that ESG issues can affect the performance of investment portfolios.
"Our investment approach emphasises and actively seeks to identify companies with sustainable, long-term competitive advantages. Within this context, we take into consideration governance, ethics, and overall social and environmental impacts. We consider relevant ESG factors in our investment process to work toward our ultimate fiduciary duty—searching for the highest risk adjusted returns for our clients."
Kimberly LaPointe, head of PGIM Investments' international business, said that while there is a "groundswell of interest" in ESG investing from clients globally, there are few global corporate bond funds with a specific ESG mandate.
She added: "With the deep experience of PGIM Fixed Income, including industry leading corporate bond capabilities, we are pleased to launch a dedicated solution for clients seeking to increase allocations to mandates that emphasise higher rated ESG investments."
PGIM Fixed Income currently has currently has $868bn of assets under management in total, including $312bn in investment-grade corporate bonds.
The new fund will initially be registered for sale in the UK, Denmark, Norway, Sweden, Germany, Switzerland, Austria and the Netherlands. It has an OCF of 0.45%.