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Troy Asset Management Limited

PRI reporting framework 2020

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.
0 Screening alone
0 Thematic alone
98 Integration alone
2 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

Troy Asset Management invests predominantly in the Sovereign Debt of developed nations.  Integrated into that research process are the analysis of the sustainability of the revenues that underpin that sovereigns ability to make both interest and capital payments.  We look at environment, social and governance risks, focusing as much on the direction of travel as the current status of those risks.  


01.3. Additional information [Optional].

Troy currently only invested in the sovereign debt of the UK and US.

2% of assets (up from 0% a year ago) have an ethical screen which negatively screens out sovereigns subject to EU or UN sanctions.  

FI 02. ESG issues and issuer research (Private)

FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description

          Troy receives regular external ESG research on issuers which flags issues that may, or may not, drive changes within our internal research.

03.2. Describe how your ESG information or analysis is shared among your investment team.

03.3. Additional information. [Optional]

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

A growing minority of the firm's fixed income assets is negatively screened to avoid investment in the debt issued by sovereigns subject to EU or UN sancations.  

04.3. Additional information. [Optional]

FI 05. Examples of ESG factors in screening process (Private)

FI 06. Screening - ensuring criteria are met

06.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Negative/exclusionary screening

06.2. Additional information. [Optional]

(C) Implementation: Integration

FI 10. Integration overview

10.1. Describe your approach to integrating ESG into traditional financial analysis.

Troy carries out qualitative and quantitative analysis dealing with ethical concerns in relation to sovereign issuers.  The analysis centres on several environmental, social and governance (ESG) issues.  ESG analysis is integrated into the research process at Troy for fixed income as with equities.  The objective of Troy’s funds to preserve capital must take into consideration material risks for each investment case.  It is within this context that we seek to address ESG factors as part of a wider set of factors that influence our decision to invest.  With the launch of the Trojan Ethical Fund in March 2019, our ESG analysis of fixed income has been bolstered by third-party research. Troy’s fixed income ESG analysis focuses on the issues which we believe pose the greatest risk to investors’ capital.  These include but are not limited to the following areas. 

  • The damage that ESG failings can have on a country’s reputation and its ability to issue debt, with particular attention to political stability, political rights and civil liberties.
  • The strength of the rule of law, particularly in relation to bribery, extortion and corruption.
  • Current account and fiscal balance, debt rating and outlook
  • The risk of fines or legal action relating to breaches of regulation and conventions relating to social standards of practice and discrimination.
  • The risk of fines or legal action relating to breaches of regulation and conventions relating to environmental standards.
  • UN and EU sanctions

10.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.


We currently invest solely in US and UK government debt.  If we were to invest in corporate debt, ESG analysis would centre on issues that are company-specific, following the same framework as that used for ESG equity analysis. 

10.3. Additional information [OPTIONAL]

FI 11. Integration - ESG information in investment processes

11.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
ESG analysis is integrated into fundamental analysis
ESG analysis is used to adjust the internal credit assessments of issuers.
ESG analysis is used to adjust forecasted financials and future cash flow estimates.
ESG analysis impacts the ranking of an issuer relative to a chosen peer group.
An issuer`s ESG bond spreads and its relative value versus its sector peers are analysed to find out if all risks are priced in.
The impact of ESG analysis on bonds of an issuer with different durations/maturities are analysed.
Sensitivity analysis and scenario analysis are applied to valuation models to compare the difference between base-case and ESG-integrated security valuation.
ESG analysis is integrated into portfolio weighting decisions.
Companies, sectors, countries and currency and monitored for changes in ESG exposure and for breaches of risk limits.
The ESG profile of portfolios is examined for securities with high ESG risks and assessed relative to the ESG profile of a benchmark.
Other, specify in Additional Information

11.2. Additional information [OPTIONAL]

FI 12. Integration - E,S and G issues reviewed

12.1. Indicate the extent to which ESG issues are reviewed in your integration process.





12.2. Please provide more detail on how you review E, S and/or G factors in your integration process.


ESG research on fixed income issuers held in the funds will be updated at least quarterly.  This is currently focused on sovereign debt since this is the funds' current fixed income exposure.  The updates centre on changes in the sovereign's outlook, breaches of/withdrawal from conventions, changes in stance from the current government towards significant ESG factors, changes in government following a general election and changes to third-party ESG scores for that particular sovereign.  Reference to new independent reports or events of significance for the relevant sovereigns will also be made.

12.3. Additional information.[OPTIONAL]