London, 29 October 2024 – We are pleased to expand our fixed income fund suite with the launch of the EdenTree Global Select Government Bond Fund, a global portfolio of government and government-related ESG-labelled bonds.

Managed by Head of Fixed Income, David Katimbo-Mugwanya, the new fund targets at least 80% asset exposure to government and government-related green, social, sustainable or impact bonds, the proceeds of which finance new or existing projects that support a reduction in carbon emissions caused by human activities and/or enable greater access to services that empower communities around the world. From a global sovereign debt universe, the responsibility of governments and government-related entities is assessed through EdenTree’s proprietary Oppressive Regime screen*.

Tailor-made to meet client demand and firmly underpinned by our signature meticulous selection of rigorously screened issuers and securities, the fund also aims to provide a regular income, payable quarterly, in a manner consistent with its sustainability approach.

Commenting on the launch, David Katimbo-Mugwanya, Head of Fixed Income, EdenTree, said: “In its latest assessment of development investment around the world, the United Nations (UN) estimates that $4.2 trillion¹ per annum is required to close the development financing gap, up from $2.5 trillion before the COVID-19 pandemic. Urgent steps are needed to address global sustainable development funding requirements, and governments have a unique ability to mobilise capital at scale through vast debt issuance programmes, placing them in a prime position to fund projects that tackle these societal challenges."

“Sovereign ESG-labelled debt issuance is continuing at an unprecedented pace², with government and or related issuance making up just over half³ of the outstanding global universe of use-of-proceeds green, social and sustainable debt. In a market environment that offers considerably higher bond yields⁴ compared to the last decade, the risk-return profile⁵ of government debt from an asset allocation perspective has markedly improved. As such, we believe this new fund is ideally placed to leverage these market dynamics in the best interests of clients seeking to credibly enhance sustainable fixed income offerings when allocating to government debt.”

Edentree’s fixed income fund suite

EdenTree’s fixed income fund range - including the Edentree Responsible & Sustainable Short Dated, Responsible & Sustainable Sterling Bond and Global Impact Bond strategies - reflects the company’s firm-wide commitment to responsible and sustainable investment principles, providing investors with a selection of vehicles with which to diversify their investment portfolios according to their financial and sustainability or impact objectives.

All funds in the range seek to generate attractive risk adjusted returns with high credit quality, low turnover, as well as competitive rates of income throughout the economic cycle. Risk parameters and characteristics vary by Fund.

James Tomlinson, Head of Wholesale Distribution, EdenTree, added: “The EdenTree Global Select Government Bond Fund has been developed in close partnership with an existing client to meet a specific strategic requirement for a sustainable government bond solution.

“Fixed Income is playing an increasingly important role for investors seeking to link financial goals with the desire to address pressing societal needs and environmental concerns. While equities have traditionally dominated the options available for responsible investors, fixed income now provides innovative sustainable investment products with varying risk profiles, degrees of impact and competitive rates of return."

“With this in mind, we are delighted to further enhance our fixed income offering, providing our clients with greater flexibility and increased choice when it comes to meeting their investment and sustainability goals.”

*EdenTree’s Oppressive Regimes list is based on assessments from Freedom House (Freedom in the World report), Transparency International (Corruption Perceptions Index), and the World Economic Forum (Gender Gap assessment). Each of these assessments considers a range of criteria when determining a country’s score, such as human rights standards, freedom of belief and political expression, use of torture, and civil liberties.

Based on the relevance of each organisation’s criteria to our assessment of oppressive regimes, we have developed a weighted average – strongly skewed towards the Freedom House ranking for every country. For our purposes, countries which fall under a certain threshold – 30% - are considered to be Oppressive.

Bonds issued by the government of any country identified as having an oppressive regime are excluded from our investment universe. This screen also specifically captures a specific set of corporate activities where there is overlap with government policies that could lead to human rights violations such as:

• Operating in a country where UN sanctions are in place
• Activities within disputed territories which may lead to complicity in violating human rights
• Involvement in projects shown to lead to egregious violations of human rights
• State-owned enterprises of any government identified as an oppressive regime
• Direct complicity in a government’s ability to carry out the death penalty
• Activities – direct or in supply chains – in any country identified as having an Oppressive Regime with state-sponsored child or slave labour, where mitigation is impossible

Important information:

This article has been prepared by EdenTree Investment Management Limited for Financial Advisors, other intermediaries and other investment professionals only. It is not suitable for private individuals. This article has been produced for information purposes only and as such the views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest thereto.

A full explanation of the characteristics of the investments is given in the Key Investor Information Document (KIID). Any forecast, figures, opinions statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, EdenTree Investment Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecast made will come to pass. Please note that the value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations, you may not get back the amount originally invested. Past performance is not necessarily a guide to future returns.

EdenTree Investment Management Limited (EdenTree) Reg. No. 2519319. Registered in England at Benefact House, 2000, Pioneer Avenue, Gloucester Business Park, Brockworth, Gloucester, GL3 4AW, United Kingdom. EdenTree is authorised and regulated by the Financial Conduct Authority and is a member of the Investment Association. Firm Reference Number 527473.

Sources

1. United Nations – Financing for Sustainable Development Report 2024 – Financing for Development at a Crossroads
2. Environmental Finance – Sustainable Bonds Insight 2024 -Breakdown of issuer type
3. Governments’ sector made up 56% of iBoxx Global Green, Social, Sustainability Index as at 31st July 2024
4. Bloomberg Barclays Global Agg. Treasuries Index yield back to approximate pre-2008 average of 3.1% vs post-2008 average of 1.6%
5. Bloomberg, showing weighted average duration of index and the yield of the index over time as at 25/10/2024