PGIM Investments launches total return bond ETF and ESG high yield mutual fund
PGIM Investments has launched two new bond funds — the PGIM Total Return Bond ETF and PGIM ESG High Yield Fund — expanding access to its flagship core-plus bond strategy and providing a high-yield option for fixed income investors committed to environmental, social and governance (ESG) investing principles. PGIM is the USD1.5 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU).
The PGIM Total Return Bond ETF aims to outperform the Bloomberg U.S. Aggregate Index with opportunistic investments in non-benchmark sectors and derivatives, while the PGIM ESG High Yield Fund seeks to outperform the Bloomberg U.S. High Yield 1% Issuer Capped Index over the long term while investing in bond issuers with stronger ESG characteristics and practices.
The firm writes that both funds are managed by PGIM Fixed Income, one of the largest and most experienced global fixed income managers in the world, with more than USD960 billion in assets under management. PGIM Fixed Income’s active investment approach is bolstered by credit research, quantitative research and risk management to help deliver competitive returns and manage volatility.
“PGIM Investments is committed to a vehicle-agnostic approach, offering our strategies in different forms across multiple platforms to meet investors where they are and enabling them to invest the way they want,” says Stuart Parker, president and CEO of PGIM Investments. “These new funds respond to the demand we’re seeing for expanded access to time-tested active management strategies and investment options that put ESG considerations at the forefront.”
The new PGIM Total Return Bond ETF (NYSE Arca: PTRB) is an actively managed fixed income ETF seeking total return by investing in a diversified portfolio of bonds across multiple fixed income sectors. It mirrors the strategy used by PGIM Fixed Income’s Total Return Bond mutual fund, a core-plus strategy that over 25 years has grown into one of the largest fixed income mutual funds, with more than USD56 billion in total net assets.
The ETF is managed by the same portfolio managers as the mutual fund — Robert Tipp, Michael Collins, Richard Piccirillo, Gregory Peters and Lindsay Rosner — a team with an average of 22 years of experience and 19 years with the firm.
The PGIM ESG High Yield Fund seeks total return, through a combination of current income and capital appreciation, by investing in a diversified portfolio of high yield fixed income securities, emphasizing issuers with stronger ESG characteristics and practices than traditional high yield bond portfolios.
The portfolio is managed by Robert Cignarella, Robert Spano, Ryan Kelly, Brian Clapp, Daniel Thorogood and Brian Barnhurst, the same managers who oversee the PGIM High Yield Fund, with USD24.5 billion in assets under management.
PGIM Fixed Income’s ESG methodology, which distinguishes the new PGIM ESG High Yield Fund, begins with an exclusionary screen and then utilises a proprietary scoring methodology to assign ESG impact ratings and construct the fund’s portfolio. These ESG ratings are assigned by a team of more than 110 analysts and overseen by PGIM Fixed Income’s ESG committee. Under normal circumstances, the fund will not purchase securities of issuers that have ESG impact ratings below an established threshold.
The PGIM ESG High Yield Fund is the second ESG mutual fund launched in the U.S. by PGIM this year, following the PGIM ESG Total Return Bond Fund, demonstrating the firm’s actions to expand product choice and help investors meet their sustainability objectives.