NN Investment Partners (NN IP) has launched a green bond fund focusing specifically on the growing corporate fixed income market.
The group highlighted the European green bond market grew by £158bn in 2019 to assets of £441.7bn with corporates dominating new issuance. It also added the market has become more diversified with more industrial, communication and technology companies – including PepsiCo – financing green projects, while insurers issued their first green bonds.
Bram Bos (pictured), lead portfolio manager of green bonds at NN IP, said: “The green bond market really took off in 2019 and is now larger than the European high yield market, for example, in terms of volume. This makes it a fully-fledged fixed income segment in its own right. We are positive this growth is set to continue. Our recent analysis of the performance of green bond indices compared to regular bond indices also makes a compelling argument for green bonds in a broader context, not just for investors with a specific impact focus.”
“Our analysis also shows that in the case of corporate bonds, the volatility of the green bond index has consistently moved closer to that of a traditional bond index. This makes corporate green bonds increasingly attractive purely from a financial and risk-return perspective. Our dedicated corporate green bond fund gives regular bond investors the opportunity to greenify their corporate bond exposure at no additional cost.”
The NN (L) Corporate Green Bond Fund will apply the same strategy as the exiting the NN (L) Green Bond fund, but with a specific focus on corporate bonds, while the firm also has the NN (L) Green Bond Short Duration fund in its range. Total assets under management for the suite of green bond funds stands at just over £2bn.
Last year, NN IP urged the auto industry to increase its adoption of green bonds in order to meet the EU’s ambitious emissions target.