Global asset manager GAM Investments announced today the launch of a sustainable local emerging market bond strategy, the first in a range of sustainable investment strategies the firm plans to launch this year. The new strategy will be managed by GAM’s emerging markets debt team.

According to GAM, the new strategy combines a positive tilt towards sovereigns with high ESG scores with the benefits of active management. The strategy will use the JP Morgan ESG GBI-EM GD Index as its benchmark, which leverages research from both Sustainalytics and RepRisk, and will also apply the GAM team’s proprietary investment process incorporating ESG factors for active allocation within the index tilts.

Paul McNamara, Investment Director for emerging market debt at GAM, said:

“We have taken ESG factors into account in our investment process for our local emerging bond strategy for a number of years, purely for their impact on risk-adjusted returns. However, as ESG factors become more efficiently priced in the sovereign debt market, we believe that now is the time for a strategy that targets both a specific ESG tilt and integrates ESG factors from a risk/return perspective.”

Stephanie Maier, Global Head of Sustainable and Impact Investment at GAM, added:

“At GAM, we are listening to the clear client demand for more strategies focused on sustainable investing and are delighted to be working in partnership with our clients to develop these. The sustainable local emerging bond strategy combines the benefits of using a well-established ESG benchmark, with the opportunity to benefit from active management and expertise of GAM’s emerging markets bond team. Later this year, we plan to launch additional ESG focused products, further building on our award winning Swiss Sustainable Companies strategy, which has a track record of more than 20 years.”

The new investment approach was developed in close partnership with Austrian sustainable investment-focused pension fund VBV-Pensionskasse. GAM stated that VBV has moved a three-digit million investment into the new sustainable solution.

Günther Schiendl, Member of the Executive Board of VBV-Pensionskasse, said:

“VBV-Pensionskasse invests responsibly, sustainably and with a focus on performance. Particularly in the area of fixed-income emerging markets, a new approach that increasingly takes ESG criteria into account was important to us, as this type of solution has been rare so far.”