Dimensional launches global ESG bond fund

The $738 billion asset manager has launched a new global ESG fund that will invest in fixed interest bonds of companies that shun tobacco, alcohol and gambling, among a variety of ESG factors.

Dimensional already runs an existing sustainability strategy, but this is the first one to invest in bonds as opposed to equities.

"Since the launch of sustainable equities trust, which has been well supported, many clients were keen to see our sustainability approach applied to other asset classes, to provide a holistic all-of-portfolio sustainable solution," Dimensional head of APAC portfolio management Bhanu Singh said.

The global sustainability bond fund will charge a management cost of 41 basis points, which is six basis points above the global bond trust that charges 35 basis points. The additional six basis points are for the ESG filters, the asset manager said.

Dimensional's global sustainability equities trust charges 47 basis points.

The fund will consider the ESG factors in a broad market-like fixed interest strategy that will aim to meet investors' economic and social responsibility concerns while meeting their long-term investment needs.

It will invest in investment grade bonds from AAA down to BBB.

The asset manager will calculate sustainability scores for each company in the eligible investment universe.

It will take into account greenhouse gas emissions intensity (including potential emissions from yet-to-be-mined coal, oil or gas reserves), land use and biodiversity, toxic spills and releases, operational waste and water management.

Tobacco, alcohol, gambling, adult entertainment, factory faming, child labour, landmines, cluster munitions and nuclear weapons systems will be monitored.

Dimensional's equities ESG fund, the Global Sustainability Trust was founded in May 2016. As at March 31 this year, the fund had $128.79 million in net assets. Since inception, its annualised return has been 11.37%. The equities strategy is also offered hedged against the New Zealand and Aussie dollars.

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