Sustainable Global Investment Grade Credit
Aiming to deliver positive total return and invest in sustainable companies
Reasons to invest
We seek to identify companies that stand to benefit from the pivot towards sustainability that is taking place in the economy, driven by increased regulation, changing consumer preferences, and shifting value chains.
Why Sustainable Global Investment Grade Credit?
We aim to identify attractive investment grade corporate issuers that meet the sustainable requirements of the strategy, where we see valuation anomalies across geographies, along credit curves, and within capital structures.
We identify forward-thinking companies within their respective sectors who see value-creation in protecting the planet and which provide products and services in a sustainable manner. We use our proprietary Sustainable Leaders or ‘SL’ score as a screening tool to refine our initial investment universe. The SL Score is a proprietary framework which provides an assessment of ranking and momentum in sustainability, focusing on non-fundamental risks. We score issuers on a scale of 1 to 5. A score of 1 would reflect leaders with momentum, while any issuers scored 4 or 5 are excluded from the investment universe of the fund.
The strategy’s dual objectives are to achieve superior risk-adjusted returns and a reduced environmental footprint relative to the benchmark (in terms of a reduced carbon, water and waste footprint) – these are not independent goals. We seek to invest in companies that see value-creation in protecting the planet and which create products and services in a sustainable manner.
How we invest
Investment process
Company and security selection
We perform bottom-up sustainability research and analysis on a refined investment universe, with a focus on identifying companies that solve environmental or social challenges we face as a society.
We assess companies’ operating, financial and ESG strengths, views that we combine with insights from analysts and engagements. Following this, we search for relative value across issuers’ capital structures.
Portfolio construction
Our credit scores and outputs from our bottom-up sustainability research determine our base position weights. In general, a high Sustainable Leaders (SL) score will tend to equate to a higher weighting in the portfolio to reflect the maximum impact on the sustainable objective.
We refine the weightings based on the risk profile (convexity, liquidity, curve, instrument type, etc.) of securities.
Team
Orla Garvey
Senior Fixed Income Portfolio Manager, Federated Hermes Limited
Nachu Chockalingam, CFA
Senior Credit Portfolio Manager, Federated Hermes Limited
Product Information
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