Brown Advisory has unveiled an analysis framework for evaluating sovereign bonds against ESG criteria  that can analyse both government and corporate bonds in portfolios with sustainability or ESG criteria

The independent and privately held global investment management firm said that sovereign bonds are a relatively less developed area in sustainable fixed income, as many ESG fixed income strategies only include labelled bonds, such as ‘green' and ‘social' bonds.

The new framework allows Brown Advisory to provide clients with exposure to international sovereign debt - the largest sector in fixed income with approximately US$60tr in outstanding debt, including inflation-linked bonds.

The ESG framework helps underpin Brown Advisory's new Global Sustainable Total Return Bond Fund, which launched earlier this month and is managed by Chris Diaz, Ryan Myerberg and Colby Stilson.

ESG

Logie Fitzwilliams, Head of International Business and Global Head of Sales at Brown Advisory, said: "More investors are seeking to incorporate ESG into investment decisions across asset classes to align their investments with sustainability goals, but sustainable approach­es have remained relatively less developed in certain segments of the fixed income market.

"We view sovereign bonds as an asset class with great potential to achieve progress on the United Nations Sustainable Development Goals (U.N. SDGs). We are pleased to be able to offer our clients access to this attractive segment of the fixed income market."

Sustainability

Ryan Myerberg, Portfolio Manager, Brown Advisory Global Sustainable Total Return Bond Fund, said: "One size does not fit all when assessing the sustainability profile of sovereigns. We're excited to launch this new framework which is systematic across asset classes and geographies, but flexible enough to capture the nuances that pertain to each coun­try and the connections across and between different ESG factors.

"The ability and reach of sovereign issuers to address key environmental and social challenges goes well beyond the scope of a corporate issuer, while sovereign ESG analysis also has the potential to reduce risk and allow us to identify compelling investment opportunities across both government and corporate bonds."