Strategies Set to Help Investors Achieve Desired Exposure & Improve their ESG Score whilst Generating Return During Volatile Markets
Submitted by: Northern Trust Corporation
Posted: Jul 27, 2020 – 01:38 PM EST
The Global High Yield ESG Bond Index Strategy and Euro Investment Grade Corporate ESG Bond Index Strategy aim to integrate sustainability considerations in order to potentially mitigate both financial and non-financial risks – and improve risk-adjusted returns as well as the overall ESG profiles.
These strategies are designed to provide investors their desired yield exposure while improving their ESG score within a risk-controlled framework. This is achieved through a combination of negative screening to remove certain companies that may have poor ESG considerations, such as violators of the U.N. Global Compact or companies with controversial lines of business. Northern Trust Asset Management then applies its best-in-class in-house optimization process. This results in improved ESG profiles, desired benchmark risk controls and yield targets.
“Although investors have been implementing equity-based ESG strategies for many years, many asset owners had been constrained by the lack of ESG investment options available in the fixed income market,” said Marie Dzanis, head of Northern Trust Asset Management, Europe, Middle East and Africa. “At Northern Trust Asset Management, we continue to innovate and pioneer ESG and sustainable strategies and analytics to meet investors’ evolving needs. We are committed to designing solutions that complement passive and active investments, mitigate risks and help investors capture new opportunities.”
“By offering these strategies at the intersection of fixed income and sustainability, we are helping investors reach their investment goals,” said Valeria Dinershteyn, sustainable investment strategist at Northern Trust Asset Management.
“These strategies employ a propriety ESG optimization to enhance the portfolio’s ESG rating relative to the index. In fact, during recent market turbulence, we’ve had an opportunity to watch our investment thesis play out. We found higher-rated ESG companies did, indeed, have tighter spreads in the fixed income markets. This underscores our belief that higher-rated ESG issuers can, additionally, offer downside mitigation during market uncertainty,” she added.
Entrusted with US$914 billion of investor assets, Northern Trust Asset Management is among the world’s largest investment managers. The firm helps investors navigate changing market environments so they can confidently realize their long-term objectives. It has more than 30 years of sustainable investing expertise and innovation, is a UNPRI signatory and manages four of the top 10 largest ESG index funds globally (eVestment data as of December 31, 2019).
About Northern Trust Asset Management
Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments, so they can confidently realize their long-term objectives. Entrusted with US$914 billion of investor asset as of March 31, 2020, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management to craft innovative and efficient solutions that deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect, and transparency.
Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2020, Northern Trust had assets under custody/administration of US $10.9 trillion, and assets under management of US $1.1 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/united-states/terms-and-conditions.
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