Video transcript
Speakers
- Victoria Bartlett – Senior Investment PR Manager, Rathbones
- Bryn Jones – Head of Fixed Income and Fund Manager, Rathbones Asset Management
Transcript
Victoria: I'm Victoria Bartlett, part of the PR team at Rathbones. Today, I'm joined by Bryn Jones, fund manager of the Rathbone Ethical Bond Fund and Head of Fixed Income at Rathbones Asset Management. We'll be discussing the fund's philosophy, investment process, what sets it apart and how it fits within a broader portfolio. Thanks for joining us, Bryn. Could you tell us a little about yourself and the fund?
Bryn: I've been managing the fund since 2004. The core objective is to outperform the IA Sterling Corporate Bond sector while applying a strong ethical overlay. We're an active fund, which means we're looking across different areas of the market rather than simply focusing on the largest and most indebted companies.
Victoria: The fund has combined ethical considerations with fixed income investing for more than two decades. How do those two elements come together within your investment philosophy?
Bryn: Bonds have limited upside potential, so protecting investors from downside risks is extremely important. Ethical analysis helps us identify risks that other investors may overlook. When we speak to company management teams, we want to understand what risks unethical behaviour could bring to the business and how that might affect its ability to repay debt.
Issues such as litigation, environmental damage and poor corporate behaviour can all create significant risks for bondholders. Some parts of the water sector, for example, have faced considerable challenges in recent years, and ethical considerations helped us avoid some of those issues. Ethical investing is not simply about positive or negative screening. It also contributes directly to investment returns by helping to protect investors from potential losses.
Victoria: Let's look more closely at the investment process. How do opportunities emerge, and what earns an investment a place in the portfolio?
Bryn: My background is in geography, and that influences the way I invest. We start by looking at what's happening in the real world, identifying risks, opportunities and long-term themes that could affect markets and businesses.
One important theme is the Anthropocene, the idea that human activity is having an increasingly significant impact on the environment and society. We also consider developments such as artificial intelligence and assess both their opportunities and risks. These themes help us decide which areas we want to include or avoid.
From there, investments go through a rigorous process involving credit analysis, valuation work and thematic assessment. The process isn't linear. It's more like a Venn diagram, where different factors intersect. When those factors align, we believe they create attractive opportunities for long-term returns.
Victoria: Once a position is in the portfolio, how do you manage risk and monitor it over time?
Bryn: Over the last two decades, Rathbones has significantly strengthened its risk management capabilities. We now have an institutional-style risk management framework that assesses areas such as capacity, liquidity and ESG risk.
At a portfolio level, we're constantly assessing valuations and looking for opportunities to switch from expensive assets into more attractively valued ones. We closely monitor both macroeconomic developments and company-specific news. We also review independent research and external analysis to challenge our own views.
Performance analysis is equally important. We regularly assess portfolio positioning, duration and risk exposure relative to peers. Understanding where we may have made mistakes is a crucial part of delivering long-term outperformance.
Victoria: There are many ethical bond funds available to investors. What differentiates this fund from its competitors?
Bryn: First, we are genuinely active. If we don't like a sector, we simply won't invest in it. Many funds are relatively constrained, whereas we have the flexibility to express high-conviction views.
Second, we have extensive experience. Rathbones has been managing ethical mandates for more than 25 years through its Greenbank investment team. This isn't a recent addition to our investment approach.
Finally, we have strong governance. Greenbank operates independently from the fund management team. If an investment doesn't meet the required ethical standards, it cannot be included in the portfolio. That separation and oversight provide an important safeguard for investors.
Victoria: Finally, who is this fund designed for, and how does it fit into a broader portfolio?
Bryn: That's an important question because some investors have historically excluded ethical funds from consideration simply because of the label. However, this fund has consistently outperformed many ethical peers as well as a range of traditional corporate bond funds.
As a result, we believe it's suitable not only for ethical and sustainable investors but for a broad range of fixed income investors. Because bond upside is naturally limited, protecting against downside risk is essential. The ethical framework helps support that objective while our active approach allows us to access opportunities beyond traditional benchmark constraints.
For investors seeking strong long-term returns with a focus on capital preservation and responsible investing, we believe the fund can play an important role within a diversified portfolio.
_0.jpg?changed=1793283566)
