Aegon AM refocuses high yield short dated bond fund to Climate Transition  

by | Jan 15, 2024

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Aegon Asset Management has evolved its USD 61 million Aegon Short Dated High Yield Global Bond Fund to focus on the transition to a net-zero global economy. 
 
To reflect the change, the fund has been renamed the Global Short Dated High Yield Climate Transition Fund from 18 December 2023 to better represent its climate transition investment criteria. The Fund will be categorised as Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation. 

The change builds on the success of the Aegon Global Short Dated Climate Transition Fund launched in January 2020, which is now $985m in size[2].

The Aegon Global Short Dated High Yield Climate Transition Fund will continue to be managed by Thomas Hanson and Mark Benbow, co-managers of Aegon AM’s successful $1bn Global High Yield franchise[3], using the same high conviction investment philosophy and process with a focus on bottom-up, fundamental credit analysis. The managers will be supported by Aegon AM’s responsible investment and credit research teams. 

 
 

The Fund’s enhancements aim to deliver an innovative solution to align with investors’ financial, ESG and climate-related goals. In addition to pursuing competitive financial returns, the Fund will incorporate proprietary ESG and climate research to improve the fund’s ESG profile and increasingly invest in companies with credible climate transition plans.

As part of the Fund’s climate focus, the team will rely on internal climate transition research to evaluate companies’ climate transition readiness. This forward-looking research framework assesses companies’ net-zero ambitions, performance and management of climate risks. Issuers are then categorized according to their level of
alignment with progress towards a net-zero economy. The Fund will follow a climate transition pathway that increasingly allocates to companies who are actively and credibly taking steps towards a net-zero transition. In addition, the Fund will adhere to a carbon intensity reduction target and employ a focused climate transition engagement program to encourage companies to improve target setting and reduce emissions.

The Fund will aim to deliver cash (SOFR) plus 3% per annum over rolling three years (gross of fees). It will continue to invest in global high yield corporate bonds, with a legal maturity of less than 5.5 years. In addition to the climate criteria, the team will apply an enhanced exclusion screen and utilise internal research to invest in companies with better ESG characteristics and avoid high ESG risks.

 

Hanson said: “The enhanced short dated high yield global bond fund aims to continue maximising returns for investors seeking attractive risk-adjusted returns and strong capital preservation, while now aligning with issuers who have clear and credible decarbonisation plans and net zero goals. 

“Our team has strong experience in managing high yield strategies. This expertise will be coupled with knowledge from our specialist responsible investment team and our proprietary climate transition framework to research and categorise issuers according to their level of alignment and progress towards a net-zero economy.” 

The newly refocused Global Short Dated High Yield Climate Transition fund will expand Aegon AM’s suite of climate solutions and offer a differentiated investment solution to investors searching for net-zero fixed income solutions. The fund is available to both institutional and wholesale investors. 

 

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