Invesco launches first US Senior Loan ESG strategy
Invesco leads ESG initiative in bank loans
Invesco manages roughly USD 34.5 billion in senior secured bank loans for institutional, retail and high net worth clients globally. More and more of these clients are focused on Environmental, Social, and Governance (ESG) criteria for investments and have asked for ESG-managed bank loan portfolios.
As bank loans are private, only a small pool of the investable universe is rated by external ESG rating providers. In order to develop an ESG product that would work for its clients, Invesco has developed a proprietary framework for rating each issuer. Our collaborative approach to ESG helps investors to better understand Invesco’s ESG considerations. Our bank loans analysts have conducted extensive due diligence reviews and engagement with issuers’ management teams and have compiled proprietary ESG ratings on more than 500 issuers. In addition, Invesco’s bank loans team now works closely with other groups within Invesco on the further development of Invesco’s ESG framework and process.
By offering the Invesco US Senior Loan ESG strategy in a commingled format, Invesco enables investors to invest on a daily basis, similar to the other senior secured loan products we manage. Through this platform, Invesco is able to offer investors access to a bank loan strategy managed according to stringent ESG criteria. “We believe that we have created the first US Senior Loan ESG strategy available to investors that were not able to follow through on their own Senior Loan ESG mandates because of the investment size,” Kevin Petrovcik says. “Working with a large seed investor, we are able to provide immediate portfolio diversification for this strategy and offer the daily liquidity that investors require. We have received significant interest in our ESG strategy from both existing clients and prospective clients and look to broaden this capability to other strategies and geographies.”
Risk warnings
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
The strategy is particularly dependent on the analytical abilities of its investment manager on senior loans. Many senior loans are illiquid, meaning that the investors may not be able to sell them quickly at a fair price and/or that the redemptions may be delayed due to illiquidity of the senior loans. The market for illiquid securities is more volatile than the market for liquid securities. The market for senior loans could be disrupted in the event of an economic downturn or a substantial increase or decrease in interest rates. Senior loans, like most other debt obligations, are subject to the risk of default.
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Issued in The Netherlands by Invesco Asset Management S.A. Dutch Branch, Vinoly Building, Claude Debussylaan 26, 1082 MD, Amsterdam, The Netherlands.