08 Jun 2021
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Nuveen launches Global Core Impact Bond strategy
Nuveen, the global investment manager with over $1.2 trillion in assets under management, announces the launch of a Global Core Impact Bond strategy.
Drawing on Nuveen’s 50-year legacy in responsible investing, the strategy offers an actively managed, multi-currency global bond portfolio that invests across global fixed income markets. The strategy follows the well-established ESG/impact investment process established in 2007 by Stephen Liberatore, Head of ESG/Impact – Global Fixed Income. As is the case for the (US) Core Impact Bond and Short Duration Impact Bond strategies, the Global Core Impact Bond strategy will direct capital to best-in-class ESG leading issuers and securities that provide direct and measurable environmental or social impact.
The strategy will be co-managed by Liberatore, Anupam Damani, Head of International and Emerging Markets Debt, and Jessica Zarzycki, co-portfolio manager for the existing ESG/impact fixed income accounts.
As an early adopter, with a strong history, of impact investing, Nuveen has a long track record of putting capital to work for both people and planet. The strategy harnesses Nuveen’s proprietary public fixed income impact framework, including transparent use of proceeds and annual disclosure of measurable outcomes, to ensure positive impact. The strategy will direct capital at the following impact themes: affordable housing; community and economic development; renewable energy and climate change; and natural resources.
The strategy is further defined by its allocation to ESG Leaders. Taking a best-in-class approach, the team invests with issuers who are setting an example for others in their industry or market sector with respect to material ESG risks and behaviors. Unlike other ESG strategies that may consider or integrate ESG factor analysis to value securities and price risk, ultimately investing in ESG laggards or material ESG risk when they feel appropriately compensated, this strategy seeks to avoid investments in such securities – regardless of price.
As is customary for global, multicurrency fixed income strategies with a total return objective, the team will seek investment opportunities across the broad bond market. The strategy may allocate up to 40% in emerging markets and 15% in high yield, at the managers’ discretion. It will launch with $25M of seed capital.
Commenting on the launch, portfolio manager Stephen Liberatore said: “Significant investment is needed to combat some of the key issues our society faces, including climate change, global inequality and chronic housing shortages across the world. Yet the perception – an inherently false one – is that impact objectives either require a performance sacrifice or can be pursued only through private strategies.
“We firmly believe public markets, and in particular the fixed income space given its size, can offer investors attractive risk adjusted returns, while ensuring they have a measurable societal and environmental impact.”
Alex Prout, Head of Global Client Relationships, commented: “The global pandemic has brought to the fore the need to tackle social and environmental issues head on. In response, we are seeing increasing demand from our clients for investment solutions that offer both returns and tangible impact. We can make real progress in areas such as affordable housing and community development, by investing in a range of public fixed income sectors where proceeds can be tied to specific projects or initiatives or are used to fund entities fully engaged in such efforts. This appeals to clients globally, as they seek to align their investments to specific outcomes.”
Nuveen has been investing responsibly for over fifty years and is a pioneer in global impact investing, with its first investment in this discipline dating back to the 1980s. Today it manages over $15 billion in ESG/impact fixed income strategies and is also one of the largest green and impact bond investors globally with AUM of $6.6bn as of 31 March 2021.
Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.