Federated Hermes Limited has launched the Federated Hermes Sustainable Global Investment Grade Credit Fund with cornerstone investor CCLA, a sustainable investment pioneer. The Fund will be co-managed by senior portfolio managers Nachu Chockalingam and Orla Garvey.
The Fund seeks to deliver a total return with a reduced environmental footprint compared to the benchmark, which is measured using carbon, water and waste footprint metrics.
As well as using an exclusions framework, the Fund employs a high barrier to entry for names entering the portfolio, utilising the teams’ proprietary scoring models and engagement expertise. While the Fund is weighted to sustainable leaders, the Fund will opportunistically invest in issuers with clear momentum in sustainability.
The Fund conforms with ‘Article 9’ of the Sustainable Finance Disclosure Regulation (“SFDR”) and sits within our ‘Sustainable’ range of products. It follows the launch of the Federated Hermes Sustainable Global Equity Fund in 2021. These launches form part of a Fund range segmentation project, allowing clients to easily select Funds based on their sustainability requirements.
This launch builds upon a well-established relationship between Federated Hermes Limited and CCLA. Last year, Federated Hermes Limited’s Credit team was appointed by CCLA as the portfolio manager for two of its fixed income funds.
Ben Funnell, Head of Investment Solutions at CCLA said: “Investment grade credit as an asset class has become substantially more attractively valued over the last 15 months, in our view, and now offers sufficient margin of safety to allow us to invest. We expect good real returns from the sector given starting yields today. Federated Hermes has significant expertise in the space, and aligns with our firm’s and our investors’ values in terms of responsible investing.”
Nachu Chockalingam, Co-Portfolio Manager of the Fund, said: “This Fund brings together our long, successful track record in investment grade credit and our specialist experience and innovation in sustainability and stewardship. Our dual objectives are not independent goals and seeking investment grade corporate issuers that also aim to mitigate the damage they cause or improve upon the impact they have relative to people and the planet will offer real value to our clients.”
Dan Churchouse, Head of UK Wholesale Distribution, said: “We are delighted to be able to further strengthen our relationship with CCLA with our partnership on this new launch. The launch of the Fund fulfils a dual purpose of being the first investment grade launch within our Sustainable range while also responding to investor demand on bringing a global investment grade fund to market. While the sustainability characteristics and engagement framework will have natural appeal to clients wishing to take a values-based approach to their investments, we believe the Fund will have broader appeal as we view our scoring framework as being additive to delivering return outcomes for our clients”.