Strategy highlights

  • Embedding 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 stabilising assets and hedging positions to provide downside protection

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 behaviour 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.

Sustainable ‘red lines’, with responsible investment team validation, seek to ensure there is no investment in security issuers that:

  • Breach the UN Global Compact
  • Are incompatible with a 2˚C world
  • Are deemed to have material ESG risks which are likely to negatively affect future performance and are associated with significant social or environmental harm

The strategy seeks to avoid investing in companies that participate in specific areas of activity that we deem to be harmful from an environmental and/or social 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 a range of global investment themes to capture these.

Investment team

Our Sustainable Global Dynamic Bond strategy is managed by a focused, experienced fixed-income team. Our investment team of research analysts and portfolio managers works together across regions and sectors, helping to ensure that our investment process is highly flexible. Our dedicated responsible investment team is an integral part of the investment decision-making process. Guided by our global investment themes, we seek to identify opportunities and risks through research and debate.

21
years’ average investment experience
14
years’ average time at Newton

Strategy profile

Objective

The strategy seeks to deliver a total return of SONIA (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

SONIA (30-day compounded) +2%

Strategy size

£0.5bn (as at 30 June 2022)

Strategy inception

Composite inception: 1 March 2019

Strategy available through pooled UK vehicle

BNY Mellon Sustainable Global Dynamic Bond Fund

View Key Investor Information Document
View prospectus

UK Inst Sustainable Global Dynamic Bond strategy factsheet

Strategy factsheet

Performance and commentary for the last quarter.


RI report Sustainable global dynamic bond

Responsible investment report

Stewardship activities (voting and engagement) for the last quarter and ESG metrics.


Sustainable Global Dynamic Bond Brochure

Brochure

More detail on the strategy’s investment approach

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.

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 considerations are assessed and the assessment of their suitability for NIM’s sustainable strategies may vary depending on the asset class and strategy involved. For Newton’s sustainable strategies, ESG Quality Reviews are performed prior to investment for corporate investments (single name equity and fixed income securities).

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.