Climate Transition Global Investment Grade Credit (UCITS)
Prioritise transition over exclusion
The Climate Transition Global Investment Grade Credit Fund seeks to deliver total returns, consisting of a high level of income and capital appreciation, whilst investing in a broad range of best-in-class companies transitioning to a lower-carbon world, with a portfolio target of net zero by 2050.

The fund is a globally diversified portfolio of predominantly investment grade credits, designed to balance financial and climate objectives.

Key differentiators

  • Provides access to the full range of credit opportunities represented by rapid, large-scale decarbonisation and a global, sector-wide transition
  • Takes advantage of a fully integrated worldwide fixed income offering, balancing global portfolio construction and in-market local coverage
  • Focuses on companies’ forward transition performance, in the strong belief that some of today’s heaviest emitters will be tomorrow’s decarbonisation outperformers
  • Uses a proprietary ESGiQ (ESG Information Quotient) rating system to capture key issues that may be mispriced

PM perspective

PM Perspective: Climate Transition Credit

Henrietta Pacquement, head of Global Fixed Income and Sustainability, discusses key 2024 takeaways and top opportunities for 2025 in climate transition global investment-grade credit investing.

Transcript

Henrietta Pacquement: I have three takeaways for 2024. Number one, global temperatures averaged over 1.5 degrees over pre-industrial temperatures for an unprecedented 12-month period. Number two, our much-criticized central bankers have defied the odds and engineered an economic soft landing—no mean feat given historical precedents. But this wasn't enough to save many elected officials, as number three, voters across the globe generally made governments pay for post-COVID war-induced inflation. How did that translate into global investment grade? A return of bond-like returns, a call we made at the start of 2024. Spreads tightened as consumers proved resilient. Rates were volatile, but they regained their diversification powers as inflation normalized. What did we get right? The recovery of the real estate sector. Our overweight benefited from corporate balance sheet repair. How does that sector fit into a climate strategy? Well, real estate is a key transition sector, given its end use status for temperature regulation. The resilient consumer—risk overweights in financials, consumer sectors, and technology helped performance as financial spreads converged towards non-financials. What's the climate angle there? Financials are facilitators of transition and adaptation. 2025 will be about living with the electoral choices of 2024. Geopolitics and redefining global trade relations are likely to loom large and have the potential to spill over into financial markets. Voters have generally asked for change. In the anglosphere, this has yielded clear mandates. In continental Europe, unstable coalitions and split parlements. In addition, three long-term themes will continue to disrupt. As we experience more climate change-driven amplification of natural phenomena, companies are going to continue to assess investments required for both transition and adaptation. AI exuberance is going to evolve from infrastructure spend to implementation. We'll be reviewing how AI gets integrated into corporate processes. Healthcare and wellbeing will be supported by demographics. Aging populations are looking to increase longevity in good health. We’ll be living at the tights. Low corporate spreads and high interest rates reflect healthier private sector balance sheets compared to more spendthrift governments. How are we going to be investing in that context? We'll be harvesting all-in yields. These are looking attractive. We'll be focusing on sectors supported by long-term themes, as we think they bring visibility. We'll also keep an eye on fundamentals as the cycle progresses. And we'll be maintaining flexibility to benefit from potential new issue premia widening and invest in most challenged cyclical sectors should the opportunity present itself.

Performance

Past performance is not indicative of future results.

Calendar year

Calendar year

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Average annual returns

Average annual returns

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Cumulative

Cumulative

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Performance and volatility metrics

Performance and volatility metrics

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Morningstar ratings and rankings

Morningstar ratings and rankings

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Composition

Portfolio statistics

Portfolio statistics

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Credit quality

Credit quality

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Maturity

Maturity

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Holdings

Top Ten Holdings

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Sector allocation

Sector allocation

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Geographic allocation

Geographic allocation

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Currency allocation

Currency allocation

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Portfolio composition

Portfolio composition

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ESG data summary

SFDR Rating 1

¹ Data is sourced from MSCI ESG Research where companies are rated on a scale of 0 – 10 (0 - worst, 10 - best). Weighted average scores exclude effects of unrated securities.

² ESG Risk Ratings measure exposure to and management of ESG risks. Lower risk scores reflect less ESG risk. Sustainalytics ESG Risk Scores measure ESG risks on a scale of 0 – 100 (0 - no ESG Risk, >40 - Severe ESG Risk).

³ Carbon emissions includes operational and first-tier supply chain greenhouse gas emissions. Data sourced from S&P Trucost Limited.

⁴ Source: Allspring Global Investments. This report contains information developed by Sustainalytics. Such information and data are proprietary of Sustainalytics and/or its third-party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers. Copyright © 2023 Sustainalytics. All rights reserved.

Our team
Meet the investment team

The team’s global bond strategies target outperformance through interest rate and currency positioning. The credit-focused strategies target outperformance via security selection.

View Team
Henrietta

Henrietta Pacquement

Head of Global Fixed Income, Head of Sustainability
Scott

Scott Smith

Head of Investment Grade Income
Alex

Alex Temple

Portfolio Manager, Head of Credit
Jonathan

Jonathan Terry

Portfolio Manager

Key risks

Asset-backed securities risk: Asset-backed securities may be more sensitive to changes in interest rates and may exhibit added volatility, known as extension risk, and are subject to prepayment risk.

Contingent convertible bonds risk: These instruments can be converted from debt into equity because of the occurrence of certain predetermined trigger events including when the issuer is in crisis resulting in possible price fluctuations and potential liquidity concerns.

Currency risk: Currency exchange rates may fluctuate significantly over short periods of time and can be affected unpredictably by intervention (or the failure to intervene) by relevant governments or central banks, or by currency controls or political developments.

Debt securities risk: Debt securities are subject to credit risk and interest rate risk and are affected by an issuer’s ability to make interest payments or repay principal when due.

Global investment risk: Securities of certain jurisdictions may experience more rapid and extreme changes in value and may be affected by uncertainties such as international political developments, currency fluctuations and other developments in the laws and regulations of countries in which an investment may be made.

High yield securities risk: High yield securities are rated below investment grade, are predominantly speculative, have a much greater risk of default and may be more volatile than higher-rated securities of similar maturity.

ESG risk: Applying an ESG screen for security selection may result in lost opportunity in a security or industry resulting in possible underperformance relative to peers. ESG screens are dependent on third-party data and errors in the data may result in the incorrect inclusion or exclusion of a security.

Emerging markets risk: Emerging markets may be more sensitive than more mature markets to a variety of economic factors and may be less liquid than markets in the developed world.

Leverage risk: The use of certain types of financial derivative instruments may create leverage which may increase share price volatility.

US Government obligations risk: Securities issued by US Government agencies or government sponsored may not be backed by the full faith and credit of the US Government and may be negatively impacted by adverse market and credit events.

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Investors should note that, relative to the expectations of the Autorité des Marchés Financiers, this fund presents disproportionate communication on the consideration of non-financial criteria in its investment policy.
 

The ongoing charges/total expense ratio (TER) reflects annual total operating expenses for the class, excludes transaction costs and is expressed as a percentage of net asset value. The figure shown is from current KID. The investment manager has committed to reimburse the Sub-Fund when the ongoing charges exceed the agreed upon TER. Ongoing charges may vary over time.
 

Any benchmark referenced is for comparative purposes only, unless specifically referenced otherwise in this material and/or in the prospectus, under the Sub-Funds’ Investment Objective and Policy.
 

†Promotes environmental and social characteristics but does not have a sustainable investment objective
 

†While the Sub-Funds listed above have access to both internal and external ESG research and integrate financially material sustainability risks into their investment decision-making processes, ESG-related factors are considered but not determinative, permitting the relevant Sub-Investment Managers to invest in issuers that do not embrace ESG; as such, sustainability risks may have a more material impact on the value of the Sub-Fund’s investments in the medium to long term. The investments underlying these Sub-Funds do not take into account the EU criteria for environmentally sustainable economic activities.
 

The Morningstar Rating™ for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for 36–59 months of total returns, 60% 5-year rating/40% 3-year rating for 60–119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods. Past performance is no guarantee of future results.

© 2024 Morningstar. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.