Investment firm Aegon AM introduces a new climate transition bond fund
Aegon Asset Management (Aegon AM) has announced the launch of a new strategy, the Aegon Investment Grade Climate Transition Fund. This fund, with a seed capital of £80m from a large UK defined benefit pension scheme, aims to align with the financial, climate, and ESG goals of its clients.
The fund will primarily focus on global investment grade corporate bonds but may also include high yield bonds and cash. The strategy aims to outperform the Bloomberg Global Aggregate Corporate Index over rolling 36-month periods, net of fees.
Rory Sandilands, Alexander Pelteshki, and Kenneth Ward will co-manage the fund, with support from Aegon AM's global credit research and responsible investment teams. The fund will invest in a high conviction, relatively concentrated portfolio of the best ideas from Aegon AM's bottom-up driven research process.
Companies not demonstrating progress towards their transition goals will be rotated out of the Aegon Investment Grade Climate Transition Fund. The fund is part of a multi-year process for Aegon AM, as they continue to make strides in climate transition investments.
Aegon AM has a long history of managing ethical and sustainable strategies across both fixed income and equities. The success of the Aegon Global Short Dated Climate Transition Fund, the first to use Aegon's proprietary climate transition framework, has grown to more than £850m.
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The current bond market environment is considered compelling for investment grade investors by Aegon AM. Climate transition is a pressing issue, and the Aegon Investment Grade Climate Transition Fund aims to reduce carbon footprint by 30% by 2029 and achieve net-zero alignment by 2040.
Given the size and depth of the global investment grade bond market, there is capacity to grow both strategies significantly going forward. The UK pension fund that supported the new Aegon strategy with a capital of £80 million is the Railways Pension Scheme.
This development underscores Aegon AM's commitment to climate transition and responsible investment, contributing to the broader impact ecosystem, biodiversity, and climate & environment categories.
