Helsinki-headquartered asset manager Nordea has expanded its ESG fixed income offering with the launch of the Nordea 1 – Emerging Stars Bond Fund.
The move follows the recent launch of the Nordea 1 – European Corporate Stars Bond Fund.
Nordea said there has been more recognition among EM investors that ESG issues can present material credit risk with respect to sovereign debt, driving demand for fixed income funds with ESG implementation.
“Given the increasing economic importance of emerging markets, EM debt is likely to continue delivering attractive risk-adjusted returns in the medium to long term,” Thede Rüst, head of Nordea’s EM debt team and manager of the fund, said.
“In addition to the solid risk/return profile and attractive valuations of EM debt, the fund benefits from a proprietary ESG model that goes beyond simply adhering to an exclusion list.”
Nordea said members of the portfolio management team will participate in international working groups and collaborative forums in order to engage with sovereigns and help them define ESG issues in the EM sovereign space.
“In the same way that ESG risk is an important factor in EM equities, it can be particularly material in the EM debt environment,” Marjo Koivisto, co-head of responsible investments at Nordea Asset Management, adds. “This fund is designed to beat the benchmark and deliver long-term sustainable returns and responsibility by offering a materially improved ESG profile compared to the general market.”