46 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 SUSTAINABLE ECONOMIC GROWTH Kenanga Sustainability Series: High Yield Bond Fund Kenanga Sustainability Series: World Quality ESG Fund About the Fund The Fund is Malaysia’s first SRI-qualified high yield bond fund, which seeks to provide income and capital growth by investing in the Northern Trust (“NT”) Global High Yield ESG Bond Index Fund managed by NT Asset Management. The Fund seeks to provide capital growth by investing in the NT World Quality ESG Fund managed by NT Asset Management. Launched Date 30 March 2022 6 September 2022 Sustainable and Responsible Investment Strategy The Fund will exclude securities that do not meet certain ESG criteria, such as weapons producers, tobacco producers, thermal coal producers and companies that are in breach of the UNGC’s Ten Principles. The Fund will employ an optimisation methodology proprietary to the Fund Investment Manager to overweight securities issued by companies that are leaders in implementing ESG principles, thereby maximising exposure to securities with higher ESG ratings while aligning key risks relative to the ICE BofAML Global High Yield Index, including duration, yield, option adjusted spread, and credit quality. The Fund Investment Manager will apply its proprietary scoring to the securities eligible for investment after excluding those securities that do not meet certain ESG criteria to assess their quality based on profitability, management efficiency and cash generation, thereby maximising exposure to securities which exhibit quality and have favourable ESG characteristics. Fund Size RM1.2 million RM64.8 million Kenanga Sustainability Series: Emergency Waqf Musa’adah Fund About the Fund The Fund sets out to generate sustainable returns that will directly benefit climate change-related disaster victims in the country by helping them return to normalcy. The Fund aims to primarily provide income distribution and achieve capital growth by investing in local and global diversified portfolios of Shariah-compliant equities, Shariah-compliant equity-related securities, sukuk, Islamic money market instruments, or Islamic deposits that integrates both Shariah principles and principles of sustainable investing. Launched Date 6 October 2022 Sustainable and Responsible Investment Strategy The External Fund Manager adopts the following ESG methodology throughout its investment and decision-making process: • ESG Integration: ESG integration involves evaluation of ESG criteria on companies in which the Fund invests. The External Fund Manager incorporates relevant ESG factors as part of the securities analysis, stock selection and post-investment portfolio monitoring. • Positive Screening: Positive screening involves assessment and scoring of companies based on the relevant ESG factors to ensure that the Fund invests only in companies with good ESG quality and ESG scores. • Negative Screening: Negative screening aims to exclude investing in sectors or companies with principal activities that are deemed to be not aligned with international norms or the External Fund Manager’s ESG core values. If the companies in which the Fund invests show persistent decline in their ESG factors and/ or ESG scores, the External Fund Manager will seek to dispose of the Fund’s investments in such companies within an appropriate timeframe. Fund Size RM1.7 million Additionally, in 2023, KIG successfully secured two (2) exclusive landmark ESG mandates from notable Malaysian public asset owners, which is a testament to the strength of our expertise, and bolsters our position as trusted fund managers in the sustainability space. For more information on funds and its performance funds under the KSS, please refer to: https://www.kenangainvestors.com.my
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