PI Partnership
INVESTING GLOBALLY, DYNAMICALLY AND RESPONSIBLY WITH ALLIANZ GLOBAL INVESTORS
Our heritage
Allianz Global Investors has been a leader in responsible invest- ment since 2000, with our first Sustainable & Responsible Investment (SRI) fixed income strategy launched in 2007. With- in our SRI portfolios, we use a proprietary approach to assess companies on their record and trajectory in environmental, social and governance (ESG) considerations. We exclude cer- tain controversial industries which violate the UN Principles for Responsible Investment and companies who do not meet our standards and have not responded to our engagement efforts.
Combining sustainability with an unconstrained ap- proach to global credit Our original Global Multi-Asset Credit strategy has more than six years of successful performance through turbulent credit markets. It aims to generate positive returns throughout the interest rate and economic cycles by allocating to different credit asset classes, and also from good fundamental bottom- up research. With a large investable universe and a benchmark-agnostic ap- proach, the team has considerable scope to identify and screen across the global credit markets. They are free to pick the best of breed wherever they may be.
In 2019, in a collaborative exercise with two existing clients, we developed an SRI version of the Global Multi-Asset Credit strategy which uses a more robust approach to sustainability, excluding controversial sectors such as tobacco, weapons and coal.
Strategy performance
-10,00% -8,00% -6,00% -4,00% -2,00% 0,00% 2,00% 4,00% 6,00%
Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 GMAC GMAC SRI
Returns gross of fees in USD terms. This is no guarantee that the newly launched fund Allianz Global Multi Asset Credit SRI will enjoy similar performance in the future.
Source: Allianz Global Investors, to September 2020
On an issuer level, the independent SRI research team uses a composite of external data sources, combined with internal research, to score the universe of companies. The Allianz Global Multi-Asset Credit SRI strategy commits to having at least 80% of the portfolio invested in companies with >1.75 (out of 4) SRI rating scores – promoting a best-in-class focus within the credit selection process.
Sustainability is about more than exclusions We do not follow a blunt exclusionary approach, however. We also invest to a limited extent in unrated or low-scoring issuers that we call “sinners turned saints”. Where problems have been identified, we engage with the issuer to raise our con- cerns. Assuming the management demonstrates willingness and ability to implement change, we may invest, while main- taining a close watch to ensure that commitments are upheld. The time horizon is typically three to six months, after which the sustainability scores should move above the minimum threshold, or we will divest from the position. Ultimately, we believe our more pragmatic approach should deliver positive social outcomes as well as improved financial returns for our investors as markets recognise an improved sustainability profile. We also believe that most adverse credit events have their roots in E, S, or G factors, so monitoring these can help to reduce the downside risks. Our SRI fund offers similar forward-looking risk and yield as the original fund, while observing the more stringent sustain- ability criteria. And as the chart below shows, there has been no sacrifice in performance vs. the original fund since launch.
To find out more about the strategy and the team who manage it, visit our website at
uk.allianzgi.com
Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. Past performance is not a reliable indicator of future results. This is a marketing communication issued by Allianz Global Investors GmbH,
www.allianzgi. com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (
www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY,
www.allianzglobalinvestors.co.uk, which is subject to limited regulation by the Financial Conduct Authority (
www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. Admaster 1411857
Issue 98 | November 2020 | portfolio institutional | 35
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