PGIM strengthens suite of ESG bond funds

by | Dec 3, 2021

PGIM, the US$1.5 trillion global investment management business of Prudential Financial, Inc., has expanded its commitment to environmental, social and governance (ESG) investing with the repositioning of four fixed income strategies.

Kimberly LaPointe, head of PGIM Investments International, commented: “Through our conversations with clients, it is clear ESG considerations have become central in the decision-making processes of most asset allocators. The repositioning of these four fixed income strategies leverages our existing integrated approach to ESG investing whilst adding ESG to the investment objectives and therefore catering to the growing demand from sustainability-minded investors.”

Managed by PGIM Fixed Income, the PGIM US BB-B High Yield Bond, Emerging Market Corporate Bond, European BB-B High Yield Bond and European Corporate Bond funds will now fully incorporate ESG principles within their stated investment objectives — with each fund rebranded to reflect this change.

One of the largest fixed income managers in the world, PGIM Fixed Income utilises a proprietary ESG impact rating framework to assess issuers’ impact on the environment and society — with ratings assigned for every issuer. These ESG ratings are assigned by its team of more than 110 analysts, working in collaboration with the five-strong ESG research team led by Eugenia Unanyants-Jackson and overseen by PGIM Fixed Income’s ESG committee.

The PGIM Emerging Market Corporate Bond Fund is now the PGIM Emerging Market Corporate ESG Bond Fund, while the PGIM European Corporate Bond Fund is the PGIM European Corporate ESG Bond Fund. The remaining two portfolios have also adopted wider investment remits, alongside deeper ESG implementation. The PGIM US BB-B High Yield Bond Fund has taken on a global mandate, as well as a broader ability to invest across the sub-investment grade credit spectrum. It is now the PGIM Global High Yield ESG Bond Fund, benchmarked against the ICE BofA Developed Markets High Yield Constrained Index.

Similarly, the PGIM European BB-B High Yield Bond Fund can now invest more broadly within the high yield credit space. Now named the PGIM European High Yield ESG Bond Fund, its benchmark is the ICE BofA European Currency Non-Financial High Yield 2% Constrained Index.

PGIM Fixed Income has been strengthening its ESG capabilities in recent years, with the group unveiling the Global Corporate ESG and Global Total Return ESG funds over the past 12 months. As a result of this repositioning, PGIM Fixed Income’s suite of fully ESG-aligned bond funds offered to non-US investors now totals six — with each vehicle classified as Article 8 funds under the new Sustainable Finance Disclosure Regulation (SFDR). PGIM Fixed Income now offers a range of ESG funds that span all major fixed income segments, covering the European and global investment grade credit markets, European and global high yield sectors and emerging markets corporates.

Sarah McMullen, head of EMEA, PGIM Fixed Income, commented: “We firmly believe the importance of having a substantive and integrated approach to ESG, leveraging the experience and knowledge of more than 110 research analysts to help our clients achieve their sustainability aspirations. The explicit repositioning of these four fixed income strategies better reflects the work undertaken by our investment teams in identifying the most compellingly valued investment opportunities across the fixed income universe, with a strong focus on environmental and social sustainability.”

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