The latest news on investment offerings, financial products and other services relevant to wealth advisors and their clients.

Union Bancaire PrivĂ©e 
Union Bancaire Privée has launched a new ESG sovereign local-currency debt strategy.

UBAM - EM Sustainable Local Bond, which meets the requirements of Article 8 of the EU’s Sustainable Finance Disclosure Regulation, will seek to improve ESG factors by favouring investments in social, green and supranational issuers.

It invests primarily in bonds that have been issued by sovereign and supranational entities domiciled in, or linked to, emerging markets which are denominated in local currencies. Actively managed, it seeks to capture the incremental yield and attractive return potential found in EM local-currency debt. 

This segment, which is currently the largest (82 per cent) in EM debt, accounting for over $24 trillion in assets, is also dominating new issuance. As emerging markets mature and grow, their ability to finance themselves through bonds issued in local currencies will increase, as will opportunities for investors, the bank said in a statement.

Over the past 10 years, it has proven difficult to allocate to this asset class due to poor benchmark representation, leading to unbalanced and concentrated country risk and, in turn, a suboptimum risk–return profile. With the new fund, UBP’s EM fixed income team and lead portfolio manager Lamine Bougueroua have adopted a risk-parity model and a total-return approach which alleviates a number of these concerns by spreading market risk more evenly across countries. 

The existence of local-currency-denominated green, social, and supranational bonds means that local debt naturally lends itself to sustainable investing, which strengthens its investment case, UBP said. By swapping government bonds for these instruments in ESG-challenged jurisdictions, the new bond opens up alternative ways for investors to provide countries that have weaker ESG credentials with financing. 

“EM central banks have pre-emptively tightened their monetary policies and we believe investors stand to benefit from very high yields and currencies with sounder long-term fundamentals. With this strategy, we are also excited to present our clients with the opportunity to contribute to the essential financing needed to achieve climate transition goals and to deliver social improvements for a more sustainable economic model in emerging markets,” Lamine Bougueroua, lead portfolio manager of UBAM - EM Sustainable Local Bond, said.

“This strategy is an important achievement for our Emerging Markets Fixed Income team who have worked hard to develop a proprietary ESG and risk model in sovereign debt,” Philippe Lespinard, head of asset management (London) and head of alternative fixed income at UBP, said. “This unique approach to EM local-currency debt, which combines risk parity with a focus on sustainability, ensures better diversification and risk-adjusted returns over time. Recent events have validated this approach, as we have excluded Russian government bonds from the portfolio since the strategy's inception.”

The fund is currently available to investors in Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. 

Janus Henderson
New York/Australia-listed Janus Henderson Group has suspended a property authorised investment fund, aka PAIF, and its associated feeder fund because there are uncertainties in the UK over the future of open-ended funds holding physical property. 

Open-ended property funds have been hit by mismatches between investors’ desire for liquidity and disruption to the underlying property market in recent years, as occurred after the 2016 UK referendum vote to leave the European Union.

The firm said that it had suspended the Janus Henderson UK Property PAIF and its feeder fund with effect from noon on 3 March â€“ an action the board of Henderson Investment Funds took as talks continue to sell all the properties held in the PAIF.

While various factors have contributed to this decision, the continuing uncertainty in the UK over the future of open-ended funds invested in direct (physical) property within a daily-dealing structure has contributed to persistent net redemptions from the PAIF, the firm said in a statement yesterday.

“As a result, Janus Henderson believes that taking the decision to suspend dealing is in the best interests of investors. Suspension will give the sale of the entire property portfolio to a single buyer the best chance to succeed,” it said. 

Head of UK retail at the group, Simon Hillenbrand said: “Having researched a number of options, we believe the best solution is to promptly execute the sale of all of the Janus Henderson UK Property PAIF’s property assets to a single buyer. The net proceeds will then be distributed to investors according to their holdings in the PAIF and its feeder fund.”

“While we cannot currently provide a firm completion date, we are optimistic that a sale could be finalised towards the end of March/early April. Proceeds should be able to be returned to investors by the end of April. We believe it is in the best interests of investors in the fund that we take steps now to secure the best outcome for them,” Hillenbrand added.