Sustainability is about meeting the needs of the present generation without compromising the ability of future generations to meet theirs. One way to achieve this is through sustainable investing where environmental, social and governance (ESG) factors are integrated into the investment and decision-making processes.
The United Sustainable Credit Income Fund (the “Fund”) invests in the RobecoSAM SDG Credit Income (the “Underlying Fund”) which provides a diversified exposure to the global credit markets and aims to maximise income throughout the credit cycle.
1. Attractive regular income
The Underlying Fund optimises yield opportunities across the global credit market for the Fund to achieve a stable monthly payout1.
2. Unconstrained and disciplined approach
The Underlying Fund adopts a prudent approach in bottom-up credit selection for flexible portfolio exposures across ratings, sectors or regions, throughout the credit cycle, not determined by any benchmark.
3. Positive contribution towards the United Nations Sustainable Development Goals (SDGs)
The Underlying Fund applies a proprietary measurement framework to quantify companies' contributions to the 17 UN SDGs to mitigate risk and enhance long-term returns.
United Nations Sustainable Development Goals
These goals were launched in 2015 to address global challenges and aims to achieve a better future for all by 2030.
Source: United Nations
The World Economic Forum has identified 3 megatrends2 that are shaping the global investment landscape – climate change, rising inequality and cybersecurity.
Though climate change has received the most widespread attention due to increased public awareness on rising temperatures, sustainability is much more than global warming.
There is scientific consensus that humans are causing global warming and it will get worse, leading to greater frequency of extreme weather events. As global warming is tackled in the coming decades, investors will need to know what to invest in – and what to avoid. This ranges from multi-billion dollar projects harnessing renewable energy to new business models in traditional industries such as car manufacturing, utilities and energy.
Source: Standard & Poor’s 2014
Global inequality has fallen over the past 30 years but risen sharply within countries due to a number of factors such as globalisation, technology and immigration. Rising inequality within countries can result in social and political unrest, leading to more volatile and lower investment returns, and less attractive investment opportunities. Countries with more significant levels of inequality are also considered to have inferior sovereign credit quality3.
CDS & FSI: increasing values signify higher risk/unrest potential; latest available data
Source: The Fund for Peace, Bloomberg, The Standardised World Income Inequality Database (SWIID)
Lower levels of inequality (as illustrated by the Gini coefficient) correspond with lower risk premiums and potential for unrest (as represented by sovereign credit default swaps (CDS) spreads and the Fund for Peace’s Fragile States Index, respectively), even though inequality is not the only explanatory factor3.
As societies and economies become more digitised and connected, cybercrime has risen at an unprecedented rate. A 2017 study by Credit Suisse showed that the annual cost of cybercrime has reached about USD $500 billion, extracting roughly 15-20% of the internet’s annual economic value. Accelerated growth in data generation and data traffic provide cybercriminals with access to an ever-expanding number of human and digital targets3.
Source: Cisco, 2018
In response, spending on cybersecurity has grown rapidly, providing ample investment opportunities in cybersecurity businesses. Investors can play a vital role in cybersecurity by directing funds to companies that actively innovate and adopt proper measures to minimise the threat of cyberattacks3.
As sustainable investing has firmly moved into the mainstream with increasing awareness on social and environmental issues, there are many approaches on how investors can address these issues in their portfolios. One approach is SDG investing where you can align your portfolio to the UN SDGs to create positive impact and earn attractive returns.
UOB Asset Management is a signatory of the UN-supported Principles for Responsible Investment (PRI)4 and we are committed to provide sustainable investment solutions for investors across Asia.