Zurich, 26 September 2019 – Federated Investors Inc., Hermes Investment Management and UBS today announced the launch of new SDG Engagement High Yield Credit funds. These pioneering funds1 will seek to achieve a meaningful social and/or environmental impact as well as a compelling return by investing in high yield bonds and engaging with their issuers. The Funds will have a Lead Engager dedicated to driving positive change in line with the United Nations Sustainable Development Goals framework.
A UCITS fund, managed by Hermes Investment Management, will be offered to investors across the globe. Additionally, a mutual fund will be available in the U.S. that will be advised by Federated Investment Management Company, sub-advised by Hermes Investment Management, and distributed by Federated Securities Corp. In 2018, Federated Investors, Inc., the parent company of the adviser and distributor, acquired a majority interest in London-based Hermes Fund Managers Limited, which operates Hermes Investment Management. The funds are the first that UBS has launched with the companies simultaneously to a global investor base.
UBS, the world’s leading global wealth manager2, will make the funds available through the UBS platform to U.S. and non-U.S. clients (the latter initially on an exclusive basis for a 6-month period). The funds will form part of UBS’s USD 5 billion commitment to SDG-related impact investing. Separately, they will also represent the first new strategy added to UBS’s award-winning3 100% sustainable multi-asset portfolio since its launch last year. At launch, this portfolio seeded a Hermes equity fund that engages listed companies in an effort to generate an SDG-related impact as well as a financial return.
In addition to diversifying clients’ sustainable and impact investments, the new SDG Engagement High Yield Credit funds aim to support key sustainability initiatives spanning the financial services industry. These include the UN-backed Principles for Responsible Investment, which has called for fund managers to engage more effectively with bond issuers4 , and the IFC’s Operating Principles for Impact Management5, a new set of global impact investing standards which UBS shaped and signed alongside roughly 60 other companies earlier this year.
Paul Uhlman, President of Federated Securities Corp, said: "UBS has a longstanding relationship with Federated Investors and Hermes Investment Management. We are pleased to have their support of these new products and look forward to continuing to collaborate with them on bringing the diverse range of Federated and Hermes strategies to investors through their advisor network around the globe.”
Saker Nusseibeh, Chief Executive at Hermes Investment Management, said: “Having consistently advocated for stewardship to be at the core of investing, we have been encouraged to see the recent shift in industry standards. Now is the time for fixed income markets to take heed and for all stakeholders to fulfil their potential as sustainable investors. The UN SDGs provide a valuable framework for engaging to create more impactful and successful companies.”
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said: “Investors must understand companies’ sustainability issues on every level as they strive to maximize their returns as well as their support for sustainability goals. Engaging with firms as issuers of debt as well as equity is an important new step on this journey.”
Christian Wiesendanger, Head of Investment Platforms and Solutions at UBS Global Wealth Management, said: “We are delighted to be working with Federated and again with Hermes on this innovative impact investing strategy. These funds help meet clients’ demands for a broader range of public market investments aimed at generating a positive impact as well as competitive returns.”
The Hermes SDG Engagement High Yield Credit Fund is available on 2 October 2019 in jurisdictions including Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Spain, Switzerland, and the UK. The Fund will be managed by Mitch Reznick, CFA, Head of Research and Sustainable Fixed Income at Hermes and Fraser Lundie, CFA, Head of Credit at Hermes. Aaron Hay of Hermes will be lead engager on the Fund. They will be supported by 26 members of the wider Hermes fixed income team.
The Federated Hermes SDG Engagement High Yield Credit Fund is available to U.S. investors on Sept. 26, 2019, and also is managed by Reznick and Lundie. It is initially being marketed in IS shares.
UBS Global Wealth Management will make the funds available on its platforms starting in October.
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UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. UBS' strategy is centered on our leading global wealth management business and our premier universal bank in Switzerland, enhanced by Asset Management and the Investment Bank. The bank focuses on businesses that have a strong competitive position in their targeted markets, are capital efficient, and have an attractive long-term structural growth or profitability outlook.
UBS is present in all major financial centers worldwide. It has offices in 50 markets, with about 31% of its employees working in the Americas, 32% in Switzerland, 19% in the rest of Europe, the Middle East and Africa and 18% in Asia Pacific. UBS Group AG employs over 67,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
About Hermes Investment Management
Hermes Investment Management, a Federated Investors company, provides world-class active investment management and stewardship services. Hermes, headquartered in London, manages US$45.8 billion in assets and offers a broad range of specialist, high-conviction investment strategies spanning listed equities, credit, real estate, infrastructure, private debt and private equity. Hermes’ strategies focus not just on financial results, but also on delivering outcomes beyond performance: holistic returns that consider impacts to society, the environment and the wider world. In Hermes EOS, the company offers one of the industry’s leading engagement resources, representing US$637.8 billion of assets*. For more information, visit www.hermes-investment.com.
Please note the total AUM figure includes US$8.4bn of assets managed or under an advisory agreement by Hermes GPE LLP (“HGPE”), a joint venture between Hermes Fund Managers Limited ("HFM"), HGPE Capital Limited and GPE Partner Limited. HGPE is an independent entity and not part of the Hermes group. US$30.0m of total group AUM figure represents HFM mandates under advice.
*Source: Hermes as at 30 June 2019.
About Federated Investors, Inc.
Federated Investors, Inc. (NYSE: FII) is a leading global investment manager with $502.2 billion in assets under management as of June 30, 2019. Our investment solutions span 130 equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies and a range of separately managed account strategies. Providing comprehensive investment management to more than 10,000 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated’s more than 1,900 employees include those in New York, Boston, London and several other offices worldwide. In 2018, Federated acquired a majority interest in Hermes Investment Management, which provides world-class active management and stewardship services. For more information, visit FederatedInvestors.com.
Mutual Funds are sold by prospectus. For more complete information regarding the Federated Hermes SDG Engagement High Yield Credit Fund, visit FederatedInvestors.com or contact your investment professional for summary prospectuses or prospectuses. You should consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. Information about these and other important subjects is in the fund’s summary prospectus or prospectus, which you should read carefully before investing.
The UN SDGs are as follows: no poverty; zero hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice and strong institutions; and partnership for the goals.
High-yield, lower-rated securities generally entail greater market, credit/default and liquidity risks, and may be more volatile than investment grade securities. Diversification does not assure a profit nor protect against loss. Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
This communication does not constitute an offer to sell or a solicitation of an offer to buy any securities or any investment funds, vehicles or accounts and may not be used or relied upon in evaluating the merits of investing in any investment fund or instrument. It shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. The information set forth herein does not purport to be complete and is qualified in its entirety by reference to the investment fund or instrument documentation. It does not constitute and should not be construed as an offer, recommendation or solicitation to conclude a transaction nor should it be treated as the provision of investment advice. It pays no regard to specific investment objectives, financial or tax situations or particular needs of any recipient. UBS does not provide legal or tax advice. Past performance is no guarantee of future results.
Information About Sustainable Investing Strategies: Sustainable investing strategies aim to consider and incorporate environmental, social and governance (ESG) factors into investment process and portfolio construction. Strategies across geographies and styles approach ESG analysis and incorporate the findings in a variety of ways. Incorporating ESG factors or Sustainable Investing considerations may inhibit the portfolio manager’s ability to participate in certain investment opportunities that otherwise would be consistent with its investment objective and other principal investment strategies. The returns on a portfolio consisting primarily of sustainable investments may be lower or higher than portfolios where ESG factors, exclusions, or other sustainability issues are not considered by the portfolio manager, and the investment opportunities available to such portfolios may also differ. Companies may not necessarily meet high performance standards on all aspects of ESG or sustainable investing issues; there is also no guarantee that any company will meet expectations in connection with corporate responsibility, sustainability, and/or impact performance.