25 Aug 2021

Eastspring Investments (“Eastspring”), the USD 254 billion[1] Asian investment management arm of Prudential plc, is offering its Asia Sustainable Bond Strategy to Hong Kong.

The Asia Sustainable Bond Strategy aims to deliver sustainable returns by investing in a mix of green, social and sustainability (GSS) bonds and other debt securities issued by Asian governments, quasi-governments, corporates or supranationals, which are aligned with Environmental, Social and Governance (ESG) principles. The fund among the strategy has been approved on the Securities and Futures Commission of Hong Kong (the “SFC”)’s list of ESG funds on the SFC’s dedicated ESG funds webpage (however such approval does not imply official recommendation by the SFC).

The ESG momentum has been gaining pace in Asia, with sustainable finance bonds issuance in the region reaching USD95 billion during the first half of 2021, compared to USD32 billion a year ago[2], amid rising demand from ESG-conscious investors in the post-pandemic environment. New segments such as sustainability-linked bonds and blue bonds have also emerged within the ESG asset class to cater to evolving demands from ESG investors in the current market environment.

Since the inception of the strategy in Singapore in December 2019, the strategy has recorded strong performance and was ranked in the top Morningstar peer quartiles among conventional Asian bond managers over the six-month and one-year periods[3].

The strategy is co-managed by Rong Ren Goh and Yong Hong Tan in Eastspring’s award-winning Fixed Income team[4]. Rong Ren is also responsible for the management of the team’s Global and Asia-focused total return fixed income funds at Eastspring, while Yong Hong heads the credit analyst team.

Rong Ren Goh, Portfolio Manager, Eastspring Investments, commented, “The urgency to undertake effective responses to address climate concerns will see rising issuances from Asia’s energy, transportation, banking and real estate sectors, creating numerous compelling opportunities for bond investors. With Asia’s unique mix of strong economic growth and policy support, we see strong potential for ESG outperformance as rapid wealth accumulation and rising ESG demand intersect.”

The strategy adopts a benchmark-unconstrained approach to maximise total returns through opportunities in the Asian bond market, offering the flexibility to invest in both hard currency and local bonds.

“As one of the largest Asian fixed income managers, we are excited to bring the strategy to investors in Hong Kong. Interest in ESG investment solutions has been growing rapidly in this market, alongside the government’s push to make Hong Kong a regional hub for green finance. The strategy offers investors the opportunity to capture sustainable returns in the world’s fastest growing region, and it provides a compelling solution for investors looking to diversify their Asian fixed income portfolio,” said Joyce Chan, General Manager and Head of Intermediary Sales, Hong Kong, Eastspring Investments.

As ESG opportunities expand, Asia’s diversity, social and cultural nuances, along with the lack of a standardised ESG taxonomy, disclosure and data definition across the region, have complicated the ESG risk assessment process.

To address this challenge, the strategy is guided by a proprietary ESG evaluation framework with robust credit selection process that leverages on our team’s deep understanding of issuers in the Asian fixed income universe. Eastspring’s ESG framework focuses on identifying the ESG risks of an issuer and its preparedness to mitigate such risks over time. The principle behind this is that issuers well prepared to deal with these risks are better placed to build sustainable businesses in the longer term.

The expansion of the strategy is in line with Eastspring’s commitment to responsible investment. Eastspring has been a signatory to the United Nations endorsed Principles for Responsible Investment (UNPRI) since 2018 and was awarded an “A” rating in Fixed Income categories - Corporate (Financial & Non-Financial) in its latest PRI assessment[5]. As Experts in Asia. Invested in Your Future., Eastspring is also working closely with parent company Prudential plc to support them to become a “net zero” asset owner by 2050.

[1] AUM as at 30 June 2021.

[2] Based on Refinitiv’s Sustainable Finance Review for 1H 2021 and 1H 2020.

[3] Based on Morningstar’s Asian Bond HK Universe as of end July 31, 2021. Past performance is not a guide to future performance.

[4] The investment team is well recognized and received awards including 2021 Best Bond Manager, Singapore - Best of Best Awards by Asia Asset Management, 2021 Best Fixed Income House, Singapore by Fund Selector Asia Singapore House Awards and Best of Best Regional Awards Asian Bond 10 Years 2020 by Asia Asset Management

[5] Signed the Principles on 27 February 2018. Eastspring Investments | Signatories | PRI (unpri.org).  Refer to “A” rating in Fixed Income categories - Corporate (Financial & Non-Financial) in the 2020 PRI Assessment Report.

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