Nomura AM launches Article 8 US high yield fund

investmentweek.co.uk:

'Sustainability has become a key element in the holistic assessment of a company's credit quality.'

The UCITS strategy is a variant of the company's $3bn US High Yield Bond fund, and applies ESG criteria to meet Article 8 requirements. The fund is managed by Nomura Corporate Research and Asset Management, the firm's high yield investment boutique.

The portfolio will be comprised of attractively valued ‘strong horse' credits «with the financial wherewithal to service their debt burden over the economic cycle», Nomura AM explained, leading to a reduction of indebtedness over time.

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Nomura defines strong horse companies as businesses that can carry their debt load through good and bad times, with an ability to de-lever their balance sheet by generating strong, positive cash flows through sustainable business practices.

The Continuum bond fund is benchmarked against the ICE BofA US High Yield Constrained index, which yielded more than 8.5% as of the end of August.

Steve Kotsen, lead manager of the US high yield strategy, will also manage the Continuum fund, supported by an assistant portfolio manager and the boutique's team of 12 high-yield credit analysts as well as two trading specialists.

Peter Ball, global head of distribution at NAM, said: «Sustainability has become a key element in the holistic assessment of a company's credit quality. Business and financial risks are closely linked to risks arising from threats to the environment or social cohesion. The Continuum strategy limits the portfolio's weighted average carbon intensity to a level below that of the benchmark.» 

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Kotsen added: «The