Manulife Investment Management Launches Asia-focused ESG Fixed Income Fund

Manulife Investment Management has announced the launch of the Manulife Global Fund – Sustainable Asia Bond, the firm’s its dedicated ESG strategy focused on Asian credit

The Fund aims to generate the best possible risk-adjusted returns by primarily investing in Asian bond issuers that demonstrate superior sustainability attributes, offering investors an alternative Asian fixed income solution that can provide enhanced financial and social values. It is a UCITS fund and is currently registered for distribution in Singapore with plans for registration in other countries, the firm said in a press release.

The Fund leverages Manulife Investment Management’s extensive regional credit research platform across 11 Asian markets. It is unique in the marketplace and leverages the firm’s competitive advantage in both Asian credit research and on-the-ground ESG research. The portfolio invests in bonds from companies that demonstrate superior ESG attributes, includes a dedicated allocation to green, social, and sustainability bonds, and focuses on three major long-term sustainability themes including climate change, ageing population, and corporate governance.

Endre Pedersen, Deputy Global Fixed Income CIO and Asia ex-Japan Fixed Income CIO, Manulife Investment Management, said: “Sustainability is top of mind among global investors, and as a leading Asian fixed income manager, we provide our clients with investment solutions that can also meet their sustainability goals. The Fund is the result of our team’s years of research and successful integration of E, S, and G factors into our credit analyses, which enables us to gain a better understanding of the true worth of companies we invest in.”

The Fund employs a proven and repeatable four-stage investment process that combines top-down macro views and bottom-up research, leveraging the firm’s extensive Asian research capabilities. The process starts with assessing the global macro environment focusing on key factors, followed by analysing and comparing a broad range of opportunities across sectors using a top-down approach and a proprietary global sovereign ESG model. Once attractive sectors and markets are identified, its extensive credit research team then conducts bottom-up, fundamental research within its ESG framework, as well as absolute and relative value analysis in the context of equal alternatives on ESG impact.

Extensive Asia-Pacific Fixed Income Footprint

With a team of over 70 fixed income investment professionals based across Asia-Pacific, Manulife Investment Management leverages its scale and resources necessary to actively analyse over 500 Asian credit issuers. Its credit analysts are tasked to evaluate how the ESG factors influence a company’s credit long-term profile. For instance, when assessing the ‘Governance’ aspect of ESG, the track record and reputation of a company’s founding family and owners are scrutinized by Manulife’s on-the-ground credit analysts who are empowered to reject issuers demonstrating poor corporate governance. Today, the investment process of the firm’s Asia fixed income desk includes a formal ESG fixed income investment committee which aims to track the ESG integration progress across all the regional portfolios as well as a proprietary scorecard that assess key risks related to E, S, and G factors.

Murray Collis, Deputy CIO, Asia ex-Japan Fixed Income, Manulife Investment Management, said: “At Manulife Investment Management, we are committed to advancing sustainable investing practices. We have received the top score of A+ for strategy and governance in the most recent UN Principles for Responsible Investment (PRI) assessment. We have developed proprietary tools, methodologies, and models to support this work. Additionally, we aim to be good stewards of the companies that we invest in by engaging with them on sustainability topics and had over 900 meetings with companies last year.”

Manulife Investment Management has a history of commitment to sustainability and has continuously improved its ESG approach in recent years, the firm reports. In 2016, it has rolled out periodic trainings on ESG integration trends and specific ESG themes, and in the following year scaled up its ESG engagements and commenced collaborative engagements to influence corporations to improve their sustainability strategies and disclosure. In 2018, the firm introduced an ESG credit risk analysis tool that systematically captures ESG risks when assessing an issuer’s credit worthiness, and quantify how ESG factors affect a company’s assigned credit rating. In 2019, it joined a consortium working under the aegis of the UN Environment Programme (UNEP) Finance Initiative to develop a portfolio-level reporting framework and template focused on identifying investment risks and opportunities associated with different climate change scenarios.