As a dedicated investment manager of preferred and capital securities, Spectrum Asset Management integrates relevant environmental, social and governance (ESG) factors into its investment decision-making processes across all portfolio strategies. Spectrum’s parent company, Principal Asset Management, became a signatory to the United Nations Principles for Responsible Investment in 2010. Principal Global Investors Funds - Preferred Securities Fund, Principal Global Investors Funds - Principal High Grade Capital Securities Fund, and Principal Global Investors Funds - Principal Capital Securities Fund, sub-advised by Spectrum, are classified as Article 8 funds under Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088 or “SFDR”) on sustainability related disclosures in the financial services sector.
ESG Integration in the Investment Process
Spectrum believes sound governance positively affects a company’s responsiveness to relevant ESG issues such as physical and transition exposures to climate change, greenhouse gas (GHG) emissions, product safety, money laundering and cyber security. We view low to medium ESG risks as manageable, whereas more severe ESG issues can negatively influence our forward-looking view of a credit.
Investment Recommendation
Spectrum carefully assesses ESG risks and opportunities to better inform our broader analysis of an issuer. Spectrum will neither make a recommendation to invest in, nor hold, securities of issuers which do not meet acceptable environmental and social standards. Our investment strategy is periodically reviewed and updated, especially as the ESG and regulatory landscape evolves.