BlackRock has launched a new fixed income fund for investors who want to incorporate environmental, social and governance (ESG) factors into their portfolios.
The BlackRock BSF Sustainable Euro Bond fund will be managed by Citywire A-rated Michael Krautzberger, who is the head of the fundamental pan European fixed income team, and Ronald van Loon. They will be supported by the European fixed income team.
The managers will screen securities for ESG factors using MSCI’s ESG ratings for corporate, sovereign and government-related securities. These asses how well the issuer manages ESG risks compared with the industry and peer group.
The new fund will invest in a broad range of securities to add alpha and maximise total return. It will concentrate on euro denominated investment grade bonds.
The fund is diversified and active risk is spread through country, sector, duration and yield curve positioning as well as through flexibly managed currency exposure.
Commenting on the launch, Krautzberger said: ‘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.’
He added that companies will high ESG scores tend to be less vulnerable to negative shocks. ‘This is an important consideration given the asymmetric impact of unexpected news on bond prices,’ Krautzberger said.
The fund is available for sale in Austria, Belgium, Denmark, Germany, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Finland, Sweden and the UK.
The news follows the launch of a UK equity long/short fund for European investors mirroring a fund aimed at UK-based investors.