Canada Sustainable Global Dynamic Bond

Strategy Highlights

  • Considering environmental, social and governance (ESG) analysis to look beyond the financial statements
  • Investing in sustainable sovereign bonds, and bonds of companies that positively manage the material impacts of their operations and products on the environment and society
  • Global investment universe, with the flexibility to use stabilizing assets and hedging positions to provide downside protection

This strategy is offered by Newton Investment Management Ltd (‘NIM’). NIM is part of the Newton Investment Management Group.

Our Philosophy and Process

Harnessing Newton’s global analysis resources, the strategy adheres to our investment framework focused on fundamentals, themes, valuations and ESG considerations.

Our fixed-income team aims to identify positive ESG behavior in issuers within a broad investment universe. Our focus is on companies (or sovereigns) that are run for the long term, seeking to effectively balance the interests of all stakeholders and actively managing the material risks for their industry (or economy) in order to deliver more resilient returns for investors.

Our sustainable ‘red lines’ are built on a combination of exclusions that effectively avoid investments in security issuers involved in or that generate a material proportion of revenues from areas of activity that we deem to be harmful from a social and/or environmental perspective.

The strategy follows an unconstrained, highly dynamic asset-allocation approach within a broad universe of global bonds; it can invest in government bonds, emerging-market sovereigns, high-yield bonds and investment-grade corporate debt. The strategy has the flexibility to manage currency exposure actively to generate additional returns.

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use themes to help identify opportunities.

Investment Team

Our Sustainable Global Dynamic Bond strategy is managed by a focused, experienced fixed-income team. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, ESG, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

24
years’ average investment experience
17
years’ average time at Newton
  • Paul Brain
    Paul Brain

    Investment leader, fixed income

  • Martin Chambers
    Martin Chambers

    Credit analyst, fixed income

  • Scott Freedman
    Scott Freedman

    Analyst and portfolio manager, fixed income

  • Trevor Holder
    Trevor Holder

    Portfolio manager, fixed income

  • Carl Shepherd
    Carl Shepherd

    Portfolio manager, fixed income

  • Parmeshwar Chadha
    Parmeshwar Chadha

    Portfolio manager, fixed income

  • Howard Cunningham
    Howard Cunningham

    Portfolio manager, fixed income

  • Jon Day
    Jon Day

    Portfolio manager, fixed income

  • Catherine Doyle
    Catherine Doyle

    Investment specialist

  • Sinead Prendergast
    Sinead Prendergast

    Team administration support

Strategy Profile

Objective

The strategy seeks to deliver a total return of SOFR (30-day compounded) +2% per annum over rolling 5-year periods, from a globally diversified portfolio of debt and debt-related securities issued by companies and governments that demonstrate attractive investment attributes and are deemed to be sustainable. In doing so, it aims to achieve a positive return on a rolling 3-year basis. However, a positive return is not guaranteed and a capital loss may occur.

Performance benchmark

SOFR (30-day compounded) +2%*

*Please note that on November 1, 2021, the performance benchmark for this strategy changed from 1-month USD LIBOR +2% to SOFR (30-day compounded) +2%.

Strategy size

C$1.2bn (as at March 31, 2023)

Strategy inception

Composite inception: March 1, 2019

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

The outperformance target stated is net of fees, for indicative purposes only, and may be changed without notice. Targeted return is generally aspirational in nature, not necessarily based on criteria and assumptions, and is not a guarantee of future returns.

Newton will make investment decisions that are not based solely on ESG considerations. Other attributes of an investment may outweigh ESG considerations when making investment decisions. The way that ESG and sustainability considerations are assessed and the assessment of their suitability for Newton’s sustainable strategies may vary depending on the asset class and strategy involved. For Newton’s sustainable strategies, ESG reviews are performed prior to investment for corporate investments (single name equity and fixed income securities). The analysis will then also follow the Newton sustainable investment process to ensure it fits with the wider Newton sustainable investment philosophy.

Key Investment Risks

  • Objective/Performance Risk: There is no guarantee that the strategy will achieve its objectives.
  • Performance Aim Risk: The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for returns to vary significantly.
  • Currency Risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
  • Changes in Interest Rates & Inflation Risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.
  • Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.
  • Credit Risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.
  • Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
  • CoCos Risk: Contingent convertible securities (CoCos) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.
  • Sustainable Strategies Risk: The strategy follows a sustainable investment approach, which may cause it to perform differently than strategies that have a similar objective but which do not integrate sustainable investment criteria when selecting securities. The strategy will not engage in stock lending activities and, therefore, may forego any additional returns that may be produced through such activities.
  • Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.

Insights

Brainwaves Episode 5: Sticky inflation: how do central banks react?
Video

Brainwaves Episode 5: Sticky Inflation: How Do Central Banks React?

Fixed-income head Paul Brain talks to multimedia editor Matthew Goodburn about how stickier-than-expected inflation could influence central-bank monetary policy decisions over the coming weeks and months.
May 22, 2023
Fixed income, Macro views
Brainwaves episode 4: SVB, monetary policy and the bond markets
Video

Brainwaves Episode 4: SVB, Monetary Policy and the Bond Markets

Paul Brain considers what the collapse of Silicon Valley Bank means for bond markets.
March 21, 2023
Fixed income
Brainwaves episode 3: Has the bond market been getting it wrong?
Video

Brainwaves Episode 3: Has the Bond Market Been Getting It Wrong?

Fixed-income head Paul Brain discusses how bond markets can predict the economic cycle.
March 14, 2023
Fixed income