NN Investment Partners (NN IP), formerly known as ING Investment Management, and the Dutch development bank FMO have joined forces in developing an emerging markets loans fund.

Nanno Kleiterp, CEO at FMO, said: “As a pioneer in emerging market debt with an excellent track record, NN IP is a natural partner for FMO to work with on this fund. The partnership will help us multiply our impact by mobilizing investors and enabling them to follow in our steps. Our ambition is to become the leading impact investor in 2020 by doubling our impact and halving our carbon footprint.”

Institutional investors will be able to invest in emerging markets loans, expected to generate stable and attractive returns with a strong ESG profile.

The fund will mirror loan investments made by FMO, giving investors the opportunity to invest alongside the organisation, taking advantage of their strong underwriting capabilities and track record in emerging markets.

As ESG is fully integrated in FMO’s credit process, investors in the fund will be investing with full measurable impact.

Investing in emerging markets loans can help institutional investors in the search for yield while offering a certain amount of protection should interest rates rise.

Hans Stoter, Chief Investment Officer of NN Investment Partners, said: “Emerging market loans provide good diversification within an EMD portfolio, while at the same time offering an attractive market risk premium. It complements NN IP’s broad EMD strategy range and extends the range of the illiquid fixed income products we have to offer to institutional investors.”

The new fund also caters to institutional demand for less liquid assets.

Yvonne Bakkum, Managing Director of FMO Investment Management, added: “By investing in this fund institutional investors can contribute to economic growth in developing countries and to building a sustainable world. Experience indicates that those who incorporate sustainable ESG practices into their business enjoy stronger long-term financial results and long-term viability, which in turn reduces expected default risk and therefore improves the risk-return profile of the investments.”