RLAM Rolls Out Sustainable Short-Term Corporate Bond Fund
The Sustainable Short Duration Corporate Bond Fund of Royal London Asset Management (RLAM) is the newest addition to its range of Sustainable Investment funds.
The new fund will use a high-confidence, actively managed strategy based on proprietary, bottom-up research to give investors access to a wide range of borrowers with a focus on sustainability in a variety of economic sectors.
The fund evaluates the Environmental, Social, and Governance (ESG) profile of bonds with estimated durations of 2.5 to 3 years, combining RLAM's longstanding experience in sustainable investment and its market-leading sterling credit franchise. While the sustainability of a potential bond is meticulously evaluated, returns are further supported by prioritising issuers who provide additional bondholder protections whenever appropriate, thereby limiting potential exposure to downside risk. Investors also benefit from the fact that the fund invests in assets with shorter terms, which makes the portfolio less sensitive to changes in interest rates.
Along with an attractive yield, the Fund will give investors access to a range of socially impactful sectors that are usually out of reach for public equity investors, such as charities, government agencies, and privately owned businesses.
The fund is exposed to a wide range of companies, from charities that help people find affordable housing to utilities that play a key role in the energy transition. The fund also gives loans to several community-based banks with strong businesses in mortgage and small- and medium-sized business (SME) lending, as well as to insurance companies that offer protection products.
The fund will be run by Shalin Shah, who is the Senior Fund Manager, and Matt Franklin, who is the Fund Manager. Both of them are part of RLAM's market-leading Sustainable Investment team. Their investment process has evolved over the past 20 years, and an independent External Advisory Committee gives them advice as well.
Shalin Shah, Senior Portfolio Manager of the RLAM Sustainable Short Duration Corporate Bond Fund, commented: "The increasingly important role of sustainability on corporate agendas offers investors opportunities to access assets that can meaningfully contribute to both their return objectives and sustainable goals. We believe our approach, focusing on high quality, short duration assets offers an attractive solution for investors seeking new sources of yield within a robust portfolio able to minimise exposure to downside risks."
Rob Williams, Chief Distribution Officer at RLAM, added: "The launch of the Sustainable Short Duration Corporate Bond Fund builds on our established range of Sustainable Investment solutions, which continue to see strong levels of interest from a broad range of investors. Its launch reflects our continued commitment to providing our clients with relevant solutions to meet their long-term return and sustainability goals."