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BlackRock launches Sustainable Euro Bond Fund as investors seek ESG exposure

BlackRock has launched the BSF Sustainable Euro Bond Fund. With the launch, BlackRock is responding to the growing demand for investments incorporating environmental, social and governance (ESG) factors.

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The BSF Sustainable Euro Bond Fund builds on the European Fixed Income’s team tried and tested investment process. The issuers we include in the fund are positively screened for environmental, social and governance (ESG) considerations using the MSCI’s ESG Ratings for corporate, sovereign and government-related issuers that assess how well the issuer manages ESG risks relative to its industry, or peer group. Investors benefit from the award-winning investment approach of Michael Krautzberger and his team, who manage the BGF Euro Bond Fund, the existing sister strategy on the basis of which Michael and the team won Morningstar European Fixed Income Manager of the Year 2016 award, the only fixed income team to ever win the award twice.

The BSF Sustainable Euro Bond Fund invests in a broad range of sources to add alpha and maximize total return, primarily focusing on euro denominated investment-grade bonds. There is a strong emphasis on diversification and active risk is spread through selection of country, sector, security, duration and yield curve positioning, as well as through flexibly-managed currency exposure.

Michael Krautzberger, Head of the Fundamental Pan European Fixed Income team: “Sustainable investing is becoming mainstream as investors globally are placing greater emphasis on transparency and seek an ESG approach to their investments. Considering ESG factors is seen as a sign of operational strength, efficiency, and management of long-term financial risks of the companies they invest in.”

“We are looking to incorporate MSCI’s ESG insights in our active positioning, for example underweighting issuers with deteriorating ESG profiles that we expect to be downgraded by MSCI. We also expect to hold a higher proportion of green bonds in this fund than we do in non-ESG strategies.”

Besides the ability to achieve specific ESG investment goals, companies with high ESG scores and in particular those scoring highly on governance, tend to be less prone to negative surprises. “This is an important consideration given the asymmetric impact of unexpected news on bond prices”, says Krautzberger.

The fund is managed by Michael Krautzberger and Ronald van Loon who have a combined investment experience of over 37 years. Michael and Ronald are supported by the European Fixed Income team. BlackRock manages over $1.4 trillion in fixed income assets on behalf of global clients, including both active and index strategies.

Next Finance September 2016

Article also available in : English EN | français FR



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