Winnersrationale

In a market environment that has resulted in significant losses across most major asset classes, it would be easy to think that ESG and sustainable investing took a backseat in 2022. While to some extent that was the case, Federated Hermes’ SDG Engagement High Yield Credit Fund proved for the second year running that it can stand head and shoulders above the competition, regardless of underlying market conditions.

The fund, which was launched in 2019, incorporates the United Nations Sustainable Development Goals (SDG) regarding global prosperity and environmental integrity as a foundation for engaging with issuers of high-yield bonds around the world. Since many high-yield issuers are yet to seriously focus on environmental integrity and global prosperity, the managers of the SDG Engagement High Yield Credit Fund believe that this investment segment is home to numerous opportunities for enacting positive change.

Assuming such engagement will enhance the performance of investee companies in the long-run, that is also beneficial for those who invest in the fund.

In terms of asset selection, the SDG Engagement High Yield Credit Fund seeks opportunities across the entire value chain — ranging from raw materials to logistics. In all this, its aim is to support the achievement of the 17 SDGs while achieving excellent returns for investors. Within these goals are 169 targets and 230 indicators.

It also uses a one-to-five scoring system that assesses the credit fundamentals of a company and the scale of the opportunity to create change. This scoring system is regularly reviewed.

Because of the sell-off in high-yield bonds in 2022, recent months have been challenged in terms of performance. However, the fund since its inception has consistently turned in a robust performance compared to its benchmark.

All of those attributes were recognised by the private banking industry in Asia-Pacific in 2022, with the SDG Engagement High Yield Credit Fund being onboarded to a significant number of new platforms during the period under consideration, despite tough underlying market conditions.

That is why Federated Hermes wins Best Fund Provider – ESG/Sustainable Bond in Asian Private Banker’s 2023 Asset Management Awards for Excellence.