Fund Complex: Shenkman Funds
Management Company: Shenkman Capital Management Inc.
Funds Affected: Shenkman Capital Floating Rate High Yield Fund, Shenkman Capital Short Duration High Yield Fund
Sustainable Investing Strategy: ESG Integration, Bondholder engagement
Summary: Shenkman’s long standing investment philosophy integrates environmental, social and governance (“ESG”) factors into its overall credit research process. As part of its investment process, Shenkman seeks to consider all meaningful risks or opportunities that may have an impact on a company’s future prospects, operating performance or valuation, including those related to ESG. Management engagement and capital markets dialogue are critical to this assessment.
ESG factors are not stand-alone considerations in Shenkman’s investment process, but are instead woven into its process in the following ways:
• A proprietary 25 question management checklist is designed to evaluate governance and management integrity;
• A proprietary risk assessment checklist seeks to quantify both quantitative and qualitative risk factors;
• Key risk factors quantified by Shenkman analysts often include important ESG variables;
• Proprietary financial models seek to quantify the impact of many ESG risk factors;
• A proprietary C.Scope score aims to assess all risk factors, including those related to ESG, that can impact credit quality; and
• A ESG checklist pulls together all of the factors listed above.
If Shenkman believes a risk factor exists that may affect the investment thesis of a particular company, that company may be excluded from the firm’s Approved List ( i.e. , generally would not be available for consideration for investment in a fund).
Note: As adopted in registration statement filed as of January 28, 2019
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