Targeting a five-year duration and an income with potential for capital growth
One of the very few short dated Sterling only investment grade ESG funds that is actively managed in the market
The fund will use the Bloomberg Barclays MSCI Sterling Liquid Corporate ESG Weighted Index
Performance on the index over the last few years is outstanding with five-year cycle showing +35%
Kingswood Holdings Limited (AIM: KWG), the integrated international wealth management company, is today delighted to announce the launch of the Kingswood ESG Bond Fund.
The fund, which is regulated by the Central Bank of Ireland and the FCA, is targeting a five-year duration and aims to provide long term income with potential for capital growth. It will use the Bloomberg Barclays MSCI Sterling Liquid Corporate ESG Weighted Index which is a fixed rate Investment Grade Sterling only Corporate Bond benchmark.
The fund looks at taking constituents from the index which weight firstly on ESG considerations and give extra weighting to issuers with improving ESG scores. This gives a set of standards and conformity to the process and as the weightings within the index are adjusted on a monthly basis, the fund is exposed to the most environment friendly companies.
The Bloomberg Barclays MSCI Sterling Liquid Corporate ESG Weighted Index will typically look at about 1,000 data points across the three elements that go into an ESG rating, including how employees are cared for within an organisation, how diverse the shareholder list is, as well as taking into account the effects that management policies would have on the environment. The performance of the index over the last few years is outstanding with five-year cycle showing +35%.
Kingswood ESG Bond Fund is one of the very few short dated Sterling only investment grade ESG funds that is actively managed in the market. It will introduce 20% maximum weightings for any individual sectors to aid diversification while maintaining liquidity through daily pricing, at midday, inflows and outflows on T+3 basis. The fund's current average weighted rating on a dummy portfolio is A- and fees are 0.25% for private investors as well as institutions.
The growth in green investments has seen a significant increase over the last few years and there is now just over a trillion dollars under management*. In bond markets, direct issuance increased to $237 billion in 2020 from $146 billion in 2018, mainly through corporate issuance, but Governments are catching up quickly. Looking at long term performance data, six out of ten ESG funds* have delivered higher returns than their conventional counterparts and 73% of the ESG Indices they follow have outperformed non-ESG equivalents since inception.
Nigel Marsh, Associate Director, Fixed Income at Kingswood, commented: 'We've seen a significant uptick in demand from clients looking to become greener in the way they invest. While definitions of ESG vary, it is easy to see why investing into companies that have strong ESG scores are becoming so popular. Those companies with higher ESG scores are defining best practice which in turn sets a level for others to strive to achieve. It protects employee health and wellbeing as well as ensuring that management are allowing decent corporate structures to be set in place.'
'We feel now is the opportune time to launch the Kingswood ESG Bond Fund which is one of the very few short dated actively managed Sterling only investment grade ESG funds in the market providing very liquid, investment grade exposure to the most competitive bonds around. By using the Bloomberg Barclays MSCI Sterling Liquid Corporate ESG Weighted Index, we are aligning our fund with the market leading ESG bond indicator and are excited to offer the investment to both our institutional and retail clients.'