London-headquartered Hermes Investment Management has been awarded a $400m (€338.8m) global high yield credit investment mandate by a buffer of the Swedish national income pension scheme Första AP-Fonden (AP1).
The mandate seeks to improve the geographical diversification of the AP1’s high yield exposure. “The aims of the mandate are aligned with Hermes’ commitment to delivering long-term strong and holistic returns for investors, thus creating value for all stakeholders in the financial system,” stated Hermes IM.
Majdi Chammas, head of External Management and Tina Rönnholm, portfolio manager responsible for external high yield investments at AP1, said: We are delighted to announce the appointment of Hermes Investment Management as one of our High Yield managers, following a comprehensive, global tender process. We share the same belief around our duty of delivering strong returns to our stakeholders, including considering the impact on society as a whole. The team is very advanced in the way they integrate ESG issues in their core investment process. Their innovative approach of pricing ESG risks in terms of spread in their fundamental credit analysis is leading in the industry.
Fraser Lundie and Mitch Reznick, co-heads of Credit, Hermes Investment Management, said: “AP1 are one of the most innovative and forward-thinking pension funds. Our Credit offering sits at the confluence of industry-leading credit management and a pioneering approach to ESG integration, which includes the pricing of ESG risks as well as analysis. Clearly they, like us, believe that creditors have as much interest as shareholders in seeing companies’ ESG practices improve and that active engagement can facilitate those improvements.”
AP1 managed SEK323bn (€33.5bn) of assets under management as of end of June 2017 while Hermes IM was managing £30.1bn (€33.5bn) of assets at the same date.