Thomas JORET
Senior Fund Manager
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About this fund
Candriam Sustainable Bond Global High Yield (hereafter "the fund"), a sub-fund of the Candriam Sustainable sicav, aims to enable shareholders to benefit from the evolution of global high yield bonds markets, with an investment in securities selected by the portfolio management team on a discretionary basis and to outperform the benchmark. The selection is mainly based on the securities financial characteristics and proprietary analysis of ESG criteria. The fund’s sustainable investment objective is to contribute to reducing greenhouse gas emissions through specific targets as well as the integration of climate related indicators in issuer and securities analysis. The fund also aims to have long-term positive impact on environment and social objectives. The fund intends to invest primarily in lower-rated (high yield) securities which are subject to greater credit and liquidity risks than higher rated securities. The fund may be appropriate for investors who are aware of, understand and are able to bear the specific risks of the fund. The investment horizon is 3 years. The fund is actively managed and the investment process implies referring to a benchmark index. For further information on the risks or the benchmark and its use, please consult the fund’s key information document (KID).
Principal assets traded:
Investment strategy:
The fund seeks to achieve capital growth by investing in the principal assets traded and to ouperform the benchmark.
The management team makes discretionary investment choices on the basis of an economic/financial analysis process as well as on a Candriam’s proprietary analysis of Environmental, Social and Governance (ESG) considerations, both indicative of risks and long-term opportunities.
When a debt security is downgraded to lower than B-/B3 or no longer considered of equivalent rating category by the Management Company, such asset will be sold within 6 months. However, should securities no longer satisfying the rating requirements represent less than 3% of the net asset value of the fund’s assets, they may be tolerated by the Management Company provided that the interests of Investors are not impaired.
The fund’s sustainable investment objective is to contribute to reducing greenhouse gas emissions through specific targets as well as the integration of climate related indicators in issuer and securities analysis.
The fund also aims to have long-term positive impact on environment and social objectives. More specifically the fund aims to achieve overall greenhouse gas emissions at least 30% lower than those of the benchmark (for corporate issuers).To achieve these objectives the fund implements a combination of positive selection of the best issuers based on ESG criteria, exclusion of issuers detrimental to these objectives or deemed to prone to controversies.
Issuers are subject to a two-pronged analysis considering how issuers activities contribute to achieving sustainable objectives on the one hand, and how issuers’ operations and policies align with the interests of their key stakeholders on the other hand. The result of this analysis forms the basis to define the investable universe and guide fund managers in their portfolio construction.
This analysis is enriched by the results of dialogs led with issuers.
This investment approach will cause the fund to avoid certain issuers due to their poor ESG quality or contribution to attaining sustainability objectives. Whilst the manager believes that such issuers are likely to lose out to more sustainable ones over the long term, market volatility and short term market trends could result in such issuers outperforming more sustainable ones over shorter periods.
For further information, please refer to Candriam’s website and/or the prospectus.
The fund may use derivative products both for investment and hedging purposes (hedging against unfavourable future financial events).
Benchmark: ICE BofA BB-B Global High Yield Non-Financial Constrained Index EUR Hedged (Total Return).
The fund is actively managed and the investment approach implies a reference to a benchmark.
Benchmark definition: The index measures the performance of USD, CAD, GBP and EUR-denominated non-financial corporate bonds below investment grade rated BB1 through B3 issued in the major domestic or eurobond markets and with issuer exposure capped at 2%.
Use of the benchmark:
- as investment universe. In general, the majority of the issuers of the fund’s financial instruments are part of the benchmark. This said, investments outside this benchmark are admitted,
- in the determination of risk levels/parameters,
- for performance comparison.
- for performance fees calculation for certain share classes if applicable.
Deviation level of the portfolio composition from the benchmark:
The fund being managed actively, its objective is not to invest in all constituents of the benchmark, nor to invest to the same extent in the constituents of the benchmark. Under normal market conditions, the tracking error of the fund will be moderate to important this is comprised between 0.75% and 3%.
This measure is an estimation of the deviation of the fund’s performance compared to the performance of the benchmark. The more the tracking error is important, the more deviations compared to the benchmark are important. The effective tracking error depends notably on the market conditions (volatility and correlations between financial instruments) and can deviate from the expected tracking error.
Bonds and other debt securities with an issuer or issue rating of minimum than B-/B3 (or equivalent) (i.e. issuers or issues considered as high risk) from one recognised rating agency or considered of equivalent rating category by the Management Company (i.e. credit quality assessed by the Management Company itself based on qualitative analysis of the instrument) at the time of purchase. In the absence of an issue rating,the Management Company reserves the right to use the issuer rating.
Investment strategy:
The fund seeks to achieve capital growth by investing in the principal assets traded and to ouperform the benchmark.
The management team makes discretionary investment choices on the basis of an economic/financial analysis process as well as on a Candriam’s proprietary analysis of Environmental, Social and Governance (ESG) considerations, both indicative of risks and long-term opportunities.
When a debt security is downgraded to lower than B-/B3 or no longer considered of equivalent rating category by the Management Company, such asset will be sold within 6 months. However, should securities no longer satisfying the rating requirements represent less than 3% of the net asset value of the fund’s assets, they may be tolerated by the Management Company provided that the interests of Investors are not impaired.
The fund’s sustainable investment objective is to contribute to reducing greenhouse gas emissions through specific targets as well as the integration of climate related indicators in issuer and securities analysis.
The fund also aims to have long-term positive impact on environment and social objectives. More specifically the fund aims to achieve overall greenhouse gas emissions at least 30% lower than those of the benchmark (for corporate issuers).To achieve these objectives the fund implements a combination of positive selection of the best issuers based on ESG criteria, exclusion of issuers detrimental to these objectives or deemed to prone to controversies.
Issuers are subject to a two-pronged analysis considering how issuers activities contribute to achieving sustainable objectives on the one hand, and how issuers’ operations and policies align with the interests of their key stakeholders on the other hand. The result of this analysis forms the basis to define the investable universe and guide fund managers in their portfolio construction.
This analysis is enriched by the results of dialogs led with issuers.
This investment approach will cause the fund to avoid certain issuers due to their poor ESG quality or contribution to attaining sustainability objectives. Whilst the manager believes that such issuers are likely to lose out to more sustainable ones over the long term, market volatility and short term market trends could result in such issuers outperforming more sustainable ones over shorter periods.
For further information, please refer to Candriam’s website and/or the prospectus.
The fund may use derivative products both for investment and hedging purposes (hedging against unfavourable future financial events).
Benchmark: ICE BofA BB-B Global High Yield Non-Financial Constrained Index EUR Hedged (Total Return).
The fund is actively managed and the investment approach implies a reference to a benchmark.
Benchmark definition: The index measures the performance of USD, CAD, GBP and EUR-denominated non-financial corporate bonds below investment grade rated BB1 through B3 issued in the major domestic or eurobond markets and with issuer exposure capped at 2%.
Use of the benchmark:
- as investment universe. In general, the majority of the issuers of the fund’s financial instruments are part of the benchmark. This said, investments outside this benchmark are admitted,
- in the determination of risk levels/parameters,
- for performance comparison.
- for performance fees calculation for certain share classes if applicable.
Deviation level of the portfolio composition from the benchmark:
The fund being managed actively, its objective is not to invest in all constituents of the benchmark, nor to invest to the same extent in the constituents of the benchmark. Under normal market conditions, the tracking error of the fund will be moderate to important this is comprised between 0.75% and 3%.
This measure is an estimation of the deviation of the fund’s performance compared to the performance of the benchmark. The more the tracking error is important, the more deviations compared to the benchmark are important. The effective tracking error depends notably on the market conditions (volatility and correlations between financial instruments) and can deviate from the expected tracking error.
Investment Team
Nicolas JULLIEN
Global Head of Fixed Income
Jean Claude TAMVAKIS
Senior Fund Manager
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Q&A, ESG, SRI, Thomas Joret, Vincent Compiègne, Jean-Claude Tamvakis, Nicolas JullienImprove the ESG profile of your High-Yield investments
For the portfolio management team in charge of the Global High Yield strategy, made up of Philippe Noyard, Global Head of Credit, Nicolas Jullien, CFA, Head of High Yield & Credit Arbitrage and Thomas Joret, Senior High Yield Fund Manager, combining their 20 years’ expertise in High-Yield bond investment with ESG (Environmental, Social & Governance) analysis, represented by Vincent Compiègne, Deputy Global Head of ESG Investments & Research, has the potential to outperform significantly over the long term. -
Belgium - Communication to stakeholders
In the context of the change of our sicav/fcp, please find here the related communications to Belgian professional or private investors. -
Fund Range Information
The Funds Range Information gives you the latest modifications to the Candriam funds range.
Other information
This is a marketing communication. Please refer to the prospectus of the funds and to the key information document before making any investment decision. This marketing communication does not constitute an offer to buy or sell financial instruments, nor does it represent an investment recommendation or confirm any kind of transaction, except where expressly agreed. Although Candriam selects carefully the data and sources within this document, errors or omissions cannot be excluded a priori. Candriam cannot be held liable for any direct or indirect losses as a result of the use of this document. The intellectual property rights of Candriam must be respected at all times, contents of this document may not be reproduced without prior written approval.
Warning: Past performance of a given financial instrument or index or an investment service or strategy, or simulations of past performance, or forecasts of future performance does not predict future returns. Gross performances may be impacted by commissions, fees and other expenses. Performances expressed in a currency other than that of the investor's country of residence are subject to exchange rate fluctuations, with a negative or positive impact on gains. If the present document refers to a specific tax treatment, such information depends on the individual situation of each investor and may change.
In respect to money market funds, please be aware that an investment in a fund is different from an investment in deposits and that the investment’s principal is capable of fluctuation. The fund does not rely on external support for guaranteeing its liquidity or stabilizing its NAV per unit or share. The risk of loss of the principal is borne by the investor.
Candriam consistently recommends investors to consult via our website https://www.candriam.com the key information document, prospectus, and all other relevant information prior to investing in one of our funds, including the net asset value (“NAV) of the funds. Investor rights and complaints procedure, are accessible on Candriam’s dedicated regulatory webpages https://www.candriam.com/en/professional/legal-information/regulatory-information/. This information is available either in English or in local languages for each country where the fund’s marketing is approved.
According to the applicable laws and regulations, Candriam may decide to terminate the arrangements made for the marketing of a relevant fund at any time.
Information on sustainability-related aspects: the information on sustainability-related aspects contained in this communication are available on Candriam webpage https://www.candriam.com/en/professional/sfdr/. The decision to invest in the promoted product should take into account all the characteristics or objectives of the promoted product as described in its prospectus, or in the information documents which are to be disclosed to investors in accordance with the applicable law.
ESG Assessment
The Sub-Fund's investment strategy is to invest mainly in debt instruments from issuers that are rated minimum B-/B3 at least by one recognised rating agency or considered of equivalent rating category by the Management Company, selected by the portfolio management team on a discretionary basis.
The selection is mainly based on the securities financial characteristics and proprietary analysis of ESG criteria.
The investment strategy is implemented following a well-defined investment process and a strict risk framework.
Respect of these elements are subject to Candriam risk monitoring.
With regard to the environmental and social sustainability aspects of the investment strategy, Candriam's proprietary ESG analysis, leading to ESG rating and scoring, as well as the norms-based controversy assessment and controversial activities exclusion policy are implemented as they enable to define the investable universe for the Sub-Fund.
In addition, Candriam's ESG analysis, comprising an analysis of the business activities of an issuer and of its interactions with its key stakeholders, is integrated into the financial management of the portfolio to enable the fund manager to identify the risks as well as opportunities that arise from the major challenges of sustainable development.
Candriam as a management company has put in place a monitoring framework as described within the sustainability risk policy.
Risk monitoring of the investment strategy of the Sub-Fund aims to ensure that investments are aligned with and take into account the environmental, social and governance indicators and sustainability thresholds as explained above.
a. ESG selection criteria:
For corporates, the internal analysis of ESG criteria consists in selecting the issuers:
• that are the best positioned to meet the challenges of sustainable development;
• that comply with the principles of the United Nations Global Compact (i.e. human rights, labour law, the environment, anti-corruption), and which are therefore less exposed to the risks associated with these themes; and
• that are not engaged in controversial activities such as armament (securities of a company whose activity consists of manufacturing, the use or possession of anti-personnel mines, cluster bombs and/or depleted uranium weapons), tobacco, thermal coal.
For sovereign issuers, the internal analysis of ESG criteria consists in selecting:
• Countries that perform best across our four categories of sustainable development criteria: Human Capital, Natural Capital, Social Capital and Economic Capital;
• Countries that are not part of our highly Oppressive Regimes or dictatorships, based on the Freedom House Freedom in the World Index and the World Bank Voice & Accountability Index.
b. Selection methodology:
The companies selected by the management company are subject to a dual analysis:
• Analysis of their activity to assess their alignment with the major challenges of sustainable development. For example, regarding the transition to a circular economy, the management company will consider a company producing recycled steel to be more sustainable than a company producing steel exclusively from iron ore; and
• Analysis of how the company manages players interacting with the company: its employees, its customers, its shareholders, its suppliers and the environment. Here too, the management company will favour companies that adopt the most sustainable practices given their sector. For example, with regard to relations with its clients, the management company will favour pharmaceutical companies with balanced pricing practices and commercial policies. Similarly, with regard to relations with their employees, the management company attaches great importance to the fight against discrimination and compliance with social standards.
Our sovereign investible universe consists of those countries which perform best across our four categories of sustainable development criteria:
• Natural Capital: stock of naturel resources managed by the country;
• Social Capital: trust, norms and institutions which people can rely on to solve common problems and create social cohesion;
• Human Capital: human productivity to which the country participates through education and other initiatives;
• Economic Capital: assessing the level of economic activity viability.
c. A team of ESG analysts is responsible for assessing the selection criteria:
The analysis and selection of sustainable investments is carried out by a dedicated team of ESG analysts within Candriam. This team is made up of specialists whose mission is to analyse the exposure of companies and governments to the risks and opportunities associated with sustainable development.
Selection criteria are expected to evolve over time, based on advances in ESG research and changes in company practices.