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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 » (C) Implementation: Integration

(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]