Status under the EU Sustainable Finance Disclosure Regulation (SFDR)

Legal Entity Identifier: 21380073HMZO2APJG684

A. Summary

The Fund is categorised as one which meets the disclosure provisions set out in Article 8 of SFDR as a product which promotes environmental and/or social characteristics and invests in companies with good governance practices but does not have as its objective sustainable investment.

• Support for UNGC principles (which cover matters including human rights, labour, corruption and environmental pollution.
• JHI leverages a proprietary ESG framework, utilising both third party data and proprietary insights, to produce company ratings for corporate credit issuers. To encourage the adoption of better environmental and/or social practices the Fund will only invest in corporate credit issuers falling within the top 5 of the 6 ratings produced. For further information, please see below.
• JHI leverages a proprietary ESG framework, utilising both third party data and proprietary insights, to produce securitisation issuer ratings. To encourage the adoption of better environmental and/or social practices the Fund will only invest in securitisations where the securitisation issuer falls within the top 5 of the 6 ratings produced. For further information, please see below.
• Avoidance of investments in certain activities with the potential to cause harm to human health and wellbeing by applying binding exclusions.
• Climate change mitigation.

The Fund does not use a reference benchmark to attain its environmental or social characteristics.

This Fund primarily seeks to obtain high income. As a secondary objective the fund seeks capital appreciation when consistent with the primary objective. The Fund invests principally in a multi-sector portfolio of Debt Securities from issuers located anywhere in the world. US issuers will typically make up at least 80% of its net asset value, and at all times at least 70% of its net asset value. The Fund may invest up to 65% of its net asset value in Debt Securities or preference shares rated below investment grade or unrated Debt Securities of similar quality as determined by the relevant Sub-Investment Adviser and may have substantial holdings in such securities. The Fund is Actively Managed with reference to the Bloomberg US Aggregate Bond Index, which is broadly representative of the companies in which it may invest.

The Sub-Investment Advisers seeks to identify future winners and losers to express their high-conviction views. A bottom-up, fundamentally driven investment process focused on companies around the world committed to transforming and improving their balance sheets, free cash flow generation, quality of management and security valuation drive security selection. This approach rests on a belief that some companies have inherent strengths, have better prospects than their peer groups and should therefore outperform even in challenging industrial and economic circumstances. A dynamic top down framework enables the Sub-Investment Advisers to make active sector allocation decisions based upon assessment of the stage of credit cycle, form views on market outlook, identify opportunities and take an appropriate amount of risk across sectors and geographies.

The binding elements of the investment strategy described below that are implemented as screens are coded into the compliance module of an order management system utilising third-party data provider(s) on an ongoing basis. The exclusionary screens are implemented on both a pre and post trade basis enabling any proposed transactions in an excluded security to be blocked and to identify any changes to the status of holdings when third-party data is periodically updated.

The Sub-Investment Adviser will:

• Apply screens so that the Fund does not invest in issuers that are in breach of the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution).
• Leverage a proprietary ESG framework, utilising both third party data and proprietary insights, to categorise corporate credit issuers against six ratings from “Category 1” (the highest) to “Category 6” (the lowest). To encourage the adoption of better environmental and/or social practices the Fund will only invest in the top 5 of 6 category ratings, i.e. it will not invest in “Category 6” (the lowest) rated issuers as such issuers have been evaluated as having insufficient management of sustainability risks. The category ratings reflect the Sub-Investment Adviser’s view of the most relevant level of ESG risk for most companies within the sector and can help inform portfolio construction in terms of exposure to a certain sector.
• Leverage a proprietary ESG framework, utilising both third party data and proprietary insights, to produce securitisation issuer ratings. To encourage the adoption of better environmental and/or social practices, the Fund will only invest in the top 5 of the 6 ratings.
• Apply screens to exclude investment in issuers if they derive more than 10% of their revenue from tobacco, or adult entertainment.
• Apply screens to exclude investment in issuers if they derive more than 10% of their revenues from oil sands extraction, arctic oil and gas, thermal coal extraction.

The Fund also applies the Firmwide Exclusions Policy (see “Firmwide Exclusions” in the "JHI Responsible Investment Policy”), which includes controversial weapons.

The Sub-Investment Adviser may include positions in the Fund that, based on third-party data or screens, appear to fail the above criteria, where the Sub-Investment Adviser believes that the third-party data is insufficient or inaccurate.

For the purposes of the AMF doctrine, the extra-financial analysis or rating is higher than:

1. 90% for equities issued by large capitalisation companies whose registered office is located in "developed" countries, debt securities and money market instruments with an investment grade credit rating, sovereign debt issued by developed countries;
2. 75% for equities issued by large capitalisations whose registered office is located in "emerging" countries, equities issued by small and medium capitalisations, debt securities and money market instruments with a high yield credit rating and sovereign debt issued by "emerging" countries.

Investors should note that a specific index is not designated as a reference benchmark to determine whether the Fund is aligned with the environmental characteristics promoted. JHI has chosen MSCI’s as its primary data source for ESG (Environmental, Social and Governance) research.

Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This ensures helps ensure that consistent data and methodologies are used given an ESG measure per security type and hence can be compared correctly in the portfolio construction process. The ESG Investment Policy, , sets out the firmwide approach to ESG Integration Principles, including JHI’s Responsible Investment Principles for long-term investment success, our approaches to Stewardship and Engagement and Baseline Exclusions applied to investee companies.