NN (L) Green Bond fund has passed the €1bn assets under management bringing the total strategy AuM including mandates to €1.5bn as of end-July 2019, only three years after its launch in 2016. Because of its current size of €1.03bn, the fund now saves 547,505 tonnes of CO2 annually.
For every €1m invested, the CO2 emissions of 534 tonnes saved by the fund are equivalent to the average annual emissions of 214 passenger cars, while for the portfolio as a whole, the renewable energy capacity added is equivalent to that generated by 113 wind turbines (as per end-July 2019).
The fund employs an impact investing strategy: it invests only in bond opportunities that combine attractive financial returns with a clear and measurable positive environmental impact. In addition to the environmental impact stemming from its CO2 savings, the strategy has outperformed from a financial perspective in every calendar year since its launch.
Since inception, it has achieved an annualised outperformance of 0.63% (gross of fees) against the benchmark¹ (4.25% for our Green Bond fund, versus 3.62% for the benchmark, as at end-July 2019). Additionally, it is ranked in the top decile in its peer group.
Bram Bos, lead portfolio manager Green Bonds at NN Investment Partners, commented: “Since inception of the fund in 2016, we have been focusing on ‘dark green’ bonds, which we believe are the primary choice for investors willing to prioritise sustainability in fixed income. Allocation to this asset class enables investors to reduce the carbon footprint of their fixed income portfolios and provides protection against climate risk without sacrificing liquidity and returns. In addition, we observe that these bonds offer better governance and greater transparency due to a higher level of engagement with issuers and stricter reporting requirements.”
The growth of the fund was supported by improved liquidity in the green bond market, which was spurred by issuers raising almost as much debt in the first half of 2019 as all of 2018. This brought the global green bond market to €440bn, up from €335bn a year ago.
The record activity was earmarked by substantial issuance of corporates and sovereigns. The number of regular green bond issuers is also increasing, creating a stable supply of green securities and improving trading activity in the secondary market.
Source Investment Europe