Federated Investors Inc., Hermes Investment Management and UBS today announced the launch of new SDG Engagement High Yield Credit funds. These pioneering funds will seek to achieve a meaningful social and/or environmental impact as well as a compelling return by investing in high yield bonds and engaging with their issuers. The Funds will have a Lead Engager dedicated to driving positive change in line with the United Nations Sustainable Development Goals framework.
A UCITS fund, managed by Hermes Investment Management, will be offered to investors across the globe. Additionally, a mutual fund will be available in the U.S. that will be advised by Federated Investment Management Company, sub-advised by Hermes Investment Management, and distributed by Federated Securities Corp. In 2018, Federated Investors, Inc., the parent company of the advisor and distributor, acquired a majority interest in London-based Hermes Fund Managers Limited, which operates Hermes Investment Management. The funds are the first that UBS has launched with the companies simultaneously to a global investor base.
UBS, the world’s leading global wealth manager will make the funds available through the UBS platform to U.S. and non-U.S. clients (the latter initially on an exclusive basis for a 6-month period). The funds will form part of UBS’s USD 5 billion commitment to SDG-related impact investing. Separately, they will also represent the first new strategy added to UBS’s award-winning 100% sustainable multi-asset portfolio since its launch last year. At launch, this portfolio seeded a Hermes equity fund that engages listed companies in an effort to generate an SDG-related impact as well as a financial return.
In addition to diversifying clients’ sustainable and impact investments, the new SDG Engagement High Yield Credit funds aim to support key sustainability initiatives spanning the financial services industry. These include the UN-backed Principles for Responsible Investment, which has called for fund managers to engage more effectively with bond issuers, and the IFC’s Operating Principles for Impact Management, a new set of global impact investing standards which UBS shaped and signed alongside roughly 60 other companies earlier this year.
Paul Uhlman, President of Federated Securities Corp, said: "UBS has a longstanding relationship with Federated Investors and Hermes Investment Management. We are pleased to have their support of these new products and look forward to continuing to collaborate with them on bringing the diverse range of Federated and Hermes strategies to investors through their advisor network around the globe.”
Saker Nusseibeh, Chief Executive at Hermes Investment Management said: “Having consistently advocated for stewardship to be at the core of investing, we have been encouraged to see the recent shift in industry standards. Now is the time for fixed income markets to take heed and for all stakeholders to fulfil their potential as sustainable investors. The UN SDGs provide a valuable framework for engaging to create more impactful and successful companies.”
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said: “Investors must understand companies’ sustainability issues on every level as they strive to maximize their returns as well as their support for sustainability goals. Engaging with firms as issuers of debt as well as equity is an important new step on this journey.”
Christian Wiesendanger, Head of Investment Platforms and Solutions at UBS Global Wealth Management, said: “We are delighted to be working with Federated and again with Hermes on this innovative impact investing strategy. These funds help meet clients’ demands for a broader range of public market investments aimed at generating a positive impact as well as competitive returns.”
The Hermes SDG Engagement High Yield Credit Fund is available on 2 October 2019 in jurisdictions including Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Spain, Switzerland, and the UK. The Fund will be managed by Mitch Reznick, CFA, Head of Research and Sustainable Fixed Income at Hermes and Fraser Lundie, CFA, Head of Credit at Hermes. Aaron Hay of Hermes will be lead engager on the Fund. They will be supported by 26 members of the wider Hermes fixed income team.
The Federated Hermes SDG Engagement High Yield Credit Fund is available to U.S. investors on Sept. 26, 2019, and also is managed by Reznick and Lundie. It is initially being marketed in IS shares.
UBS Global Wealth Management will make the funds available on its platforms starting in October.
About Federated Investors, Inc.
Federated Investors, Inc. (NYSE: FII) is a leading global investment manager with $502.2 billion in assets under management as of June 30, 2019. Our investment solutions span 130 equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies and a range of separately managed account strategies. Providing comprehensive investment management to more than 10,000 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated’s more than 1,900 employees include those in New York, Boston, London and several other offices worldwide. In 2018, Federated acquired a majority interest in Hermes Investment Management, which provides world-class active management and stewardship services. For more information, visit FederatedInvestors.com.
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