Morgan Stanley Investment Management (MSIM) today announced the launch of the Morgan Stanley UK Sustainable Fixed Income Opportunities Fund. Managed by MSIM’s Global Fixed Income Investment team, the fund will combine sustainability with an active, flexible approach to investing by identifying the best ideas within the global fixed income universe.
The fund aims to offer absolute risk-adjusted returns while making a positive contribution towards a more sustainable and inclusive world. The top-down selection process allows the fund to:
- Reduce exposure to material ESG risk and negative sustainability impacts, through restriction screening of controversial sectors such as weapons, tobacco, and some fossil fuels, as well as international norms violations.
- Tilt the portfolio in favour of the 80% strongest sustainability performers across sovereigns and corporates, by sub-sector, as defined by MSIM Fixed Income’s proprietary ESG assessment methodologies and:
- Contribute to positive outcomes based on key sustainability themes, with a particular focus on low carbon footprint.
The portfolio will allocate capital across a wide variety of fixed income asset classes such as Credit, which includes Investment Grade, High Yield, Emerging Market, Convertible, Securitised and Government bonds, both Developed and Emerging Markets. The fund is designed to be less carbon intensive than its index and will maintain a net positive alignment with the UN SDGs, while also investing in Green, Social and other labelled Sustainable Bonds.
Leon Grenyer, Portfolio Manager of the UK Sustainable Fixed Income Opportunities Fund commented: “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. We utilise an active asset allocation process across the global fixed income opportunity set, and, 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 as asset allocation driven by benchmark weightings can result in exposure to parts of the market which offer lower potential returns or greater risk. As such, an active and flexible investment strategy may be a better alternative and stand to outperform.”
“Morgan Stanley Investment Management is committed to creating products and solutions which integrate sustainability objectives in a holistic way without compromising returns. We actively seek to identify holdings with a long-term competitive advantage by relying on a process that includes ESG integration, social and environmental impact assessment, and active engagement,” said Navindu Katugampola, Head of Sustainable Investing for Fixed income and Liquidity, Morgan Stanley Investment Management.
Richard Lockwood, Head of Distribution for Northern Europe, Morgan Stanley Investment Management concluded, “UK Sustainable Fixed Income Opportunities further adds to our fund range offering client’s products that focus on key social issues, climate change and other ESG themes in the investment process whilst aiming to deliver attractive, long-term returns. UK investors are well aware of the challenges faced across all areas of the sustainability spectrum and our fixed income sustainability range offers them an opportunity to align their ESG requirements to their investment goals.”
