Active fixed income manager BlueBay Asset Management announced the launch of the BlueBay Impact-Aligned Bond Fund, which will invest in the public debt of companies whose core economic activities offer investment opportunities and contribute to addressing global environmental and social challenges like climate change and inequalities.

The fund will be managed by BlueBay Partner and Senior Portfolio Manager Tom Moulds, along with Head of ESG Investment and Portfolio Manager, My-Linh Ngo and Portfolio Manager, Harrison Hill.

According to BlueBay, the new UCITS fund aims to enable fixed income investors to invest in the liquid public debt of issuers that make a positive contribution to people and the planet, while also seeking to deliver attractive returns.

Moulds said:

“To invest thematically, manage risk and focus on delivering strong investment returns, we have enhanced our approach to portfolio construction. Starting by broadening out the fund’s scope to include a global universe, we then dropped the constraints of being tied to a benchmark. Ultimately, we’re focussed on finding companies that provide solutions to our sustainability themes whilst offering attractive valuations, and this flexible approach to investing allows us to do just that.”

According to BlueBay, the firm expects the fund to appeal to both institutional and wholesale investors looking to align their fixed income investment allocations with their ESG objectives, by offering an alternative to existing sustainability-focused fixed income funds that have largely been limited to green bond funds, or more illiquid impact investment strategies.

The impact fund, which is categorised under Article 9 of the Sustainable Finance Disclosure Regulation (SFDR), aims to invest in issuers addressing seven sustainability themes, including ‘people/social’ themes of achieving an inclusive society, building knowledge and skills, and ensuring good health, safety and well-being, and ‘planet/environmental’ objectives including enabling a circular economy, ensuring clean and plentiful water, promoting clean and safe energy, and promoting sustainable mobility and infrastructure.

Ngo said:

“We’re excited to be innovating new ways for our clients to invest in fixed income. To date, this style of investing has largely been limited to listed equities. Widening this opportunity set to fixed income is critical from a sustainability perspective. For one, the absolute size of the debt market dwarfs that of equities, so in our view if you want to make an impact you need to think beyond stocks alone. Furthermore, we see many of the activities that need to be financed to enable the sustainability transition are going to be more attractive to fixed income investors rather than equity.”