BlueBay Asset Management, the specialist fixed income manager of Royal Bank of Canada, announced today the launch of the BlueBay Total Return Diversified Credit ESG Fund, a multi-asset ESG strategy, aimed at enabling fixed income investors to gain exposure to the firm’s ESG-focused ‘best ideas,’ across global high yield, bank loans, financial capital bonds, structured credit, convertible bonds, emerging markets and developed market investment grade categories. The new fund is categorized under Article 8 of the Sustainable Finance Disclosure Regulation (SFDR).

The BlueBay Total Return Diversified Credit ESG Fund will utilize the firm’s proprietary ESG research to identify and avoid investments with excessive ESG risks. It will also apply exclusions for companies deriving revenues from oil sands and arctic drilling, as well as companies involved in controversial weapons or tobacco, and limit exposure to companies with revenues derived from thermal coal or fossil fuel exploration and production. The fund will also not invest in sovereigns that have not ratified the Paris Agreement.

esg playbook

The fund will be managed by Raphael Robelin, BlueBay’s Head of Multi-Asset Credit and Blair Reid, Senior Portfolio Manager, supported by Maria Satizabal, Portfolio Manager. Reid, said:

 “Investors want more ESG without sacrificing returns. Our innovative approach is to target a similar yield to our standard MAC strategy by adjusting the credit risk within our MAC ESG strategy (BB on average for MAC ESG, versus BB+ for standard MAC). We are excited to be launching this latest iteration of our multi-asset credit offering. It feels an understatement to say that investors are increasingly focused on the impact their money is having on the world from an ESG perspective, so for us, this fund is a natural next step in the evolution of our product suite.”

BlueBay stated that leading insurance company Lloyd’s of London will invest in the new fund at launch. Lloyd’s Investment Manager, Steven Koeman said:

“This is a further step for Lloyd’s in integrating ESG factors across all our investments as part of our wider sustainability ambitions.”