abrdn Launches High Yield Sustainable Bond Fund

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by KnowESG
Graph of forecast growth of green bonds in 2023.

The well-known global asset management company, abrdn, has introduced a new fund called the Asian High Yield Sustainable Bond Fund. The purpose of this fund is to offer investors a profitable source of income as various economies strive to steer clear of economic downturns.

Investors seeking long-term gains that are backed by Asia's thriving economic growth should consider the region's high-yield corporate bond market. With a yield of 7.7%, this market offers some of the most attractive returns compared to other traditional public market assets. Additionally, the need for sustainable development is pressing in Asia.

The Fund aims to allocate at least 70% of its investments towards Asian high-yield credit while reserving up to 30% for other diversifying investments, such as Asian investment-grade, local currency, and emerging market credit. This broadened investment approach diversifies the income sources and gives the Fund more flexibility to deviate from the benchmark. Diversifying across different parts of the credit spectrum is also likely to make the portfolio much less volatile than the benchmark.

Thomas Drissner, Head of Asian Credit Research, abrdn, said: “Asian credit offers attractive valuations both against historical norms and compared to other fixed income markets presenting a good opportunity to capture the market’s upside potential. It makes for a compelling investment case, and it aligns with the strategic priorities of our global asset management business.”

The Fund is overseen by abrdn's experienced Asia Fixed Income team, consisting of 23 individuals, including Asian quantitative and ESG analysts who work closely with the company's central Sustainability Group. With on-the-ground resources at their disposal, the team can identify and work with companies to implement measures to manage ESG risks and promote sustainable practices.

The Fund is classified as Article 8 under the European Commission's Sustainable Finance Disclosure Regulation (SFDR).

Nicole Lim, Investment Analyst, ESG, Fixed Income, abrdn, added: “Asia’s climate and sustainability challenges are unique and nuanced, with many companies in the early stages of the journey. For this to happen, a lot of money will be needed, and the bond markets in the region are a key way to get it. Here is where we’re seeing the greatest opportunities for investors looking to support Asia’s sustainable development.”

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Source: hubbis