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Pimco’s Balls outlines ESG bond fund ambitions

Pimco’s Balls outlines ESG bond fund ambitions

Pimco is in the early stages of expanding its ambitious ESG-focused efforts which could involve the firm’s investment grade offerings receiving similar treatment to its global and US bond funds.

That is according to the group’s CIO for global bonds, Andrew Balls, who told Citywire Selector that, while further work is needed, the US firm is keen to further extend its green footprint.

The company unveiled an ESG-focused spin-off of Citywire + rated Balls’ $9.8 billion Pimco GIS Global Bond fund in January, which came amid plans to better integrate monitoring into all of its strategies.

At that time, two funds under the remit of Scott Mather, CIO for US core strategies, and co-head of ESG initiatives, Alex Struc, had additional ESG overlays added to two of their US-focused funds.

Balls said: ‘We had client demand for ESG and all of our credit processes take into account ESG, so to an extent it is already part of the mainstream. However, engagement with corporate issuers remains a very important part of what we are trying to do.’

The Global Bond ESG fund has currently accrued $151 million in assets since its launch on January 12 and Balls believes there is scope to expand which funds follow suit with an ESG version.

‘For me managing the Global Bond ESG fund is a very similar process to the Global Bond fund, and I have a team which helps with the engagement process,’ he said. ‘Over time we will do a lot more. It is a work in progress. We started with US and Global, we would like to roll it out to investment grade space but we will work out some of the details first.’

With no definite timeline, Balls said the aim with all the ESG-focused strategies is to meet strict criteria without forfeiting returns. ‘We have a set of rules around sectors and some rules around sovereign space as well. We want very low scores in terms of transparency and corruption.

‘This is judged by external providers, so it isn’t our judgement, as it should always be done by a third party source. On the corporate side we want high ESG scores and we will have a particular focus in our Global Bond ESG fund.

Andrew Balls was speaking as part of a longer interview covering market thinking, positioning in global bonds and geopolitics. Stay tuned for the interview in full.

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