The asset manager Bantleon is expanding its range of sustainable funds and has launched the mutual fund Bantleon Select Green Bonds, which invests primarily in global green bonds with investment-grade rating. In addition, up to 25% of the fund assets can be invested in high-yield bonds with a minimum rating of »B-« or »B3«. The main component of the fund comprises bonds denominated in euro. In order to increase the return potential, the portfolio management may also invest in bonds denominated in other currencies of industrialised countries, whereby the foreign currency risk is almost completely hedged. »The focus on a global universe offers not only higher return opportunities but also better diversification potential and higher liquidity than with purely European portfolios,« explains Stephan Kuhnke, Head of Portfolio Management. The investment objective is to achieve an outperformance compared to the global green bond market (hedged in EUR) without increasing volatility. Furthermore, ESG ratings and standards are targeted that exceed those of the benchmark.
As the Green Bond Principles of the international industry association are not yet binding guidelines for capital market participants – and therefore not all proceeds of green bonds provide a sustainable environmental benefit – Bantleon relies on its own systematic, multi-stage analysis process. This process is based on five central criteria: greenwashing, emission/issuer analysis, use of funds & administration, reporting, second opinion & certification. In addition to avoiding greenwashing and ensuring transparent reporting, the analysis focuses in particular on the use of funds. In order to produce precise analyses, second opinions of independent analysis companies are included. In the first step, Bantleon examines the green bonds on the basis of the exclusion criteria, which are regularly monitored independently of each other and which, if they emerge, lead to the immediate exclusion of the presumed green bond.
If there are no exclusion criteria, the bonds are scored in a second step. Regarding the use of funds, the focus here is particularly on compatibility with the UN sustainability goals, as green bonds may have a significant influence on the achievement of 12 of the 17 sustainability goals.
In addition to the green bond process, all eligible bonds are also analysed with regard to ESG criteria. »Thus, the selected green bonds not only have an environmentally beneficial effect, but also create an entirely sustainable portfolio,« says Stephan Kuhnke. The ESG process is based on the environmental, social and corporate governance principles in Bantleon's investment process and the Principles for Responsible Investment of the UNPRI organisation.
»Bantleon Select Green Bonds combines Bantleon's award-winning economic research with the expertise of experienced green bond specialists,« explains Kuhnke. »While the individual bonds are selected using classic bottom-up and relative value analysis, the portfolio managers primarily focus on the economic cycle when managing the performance sources of duration, yield curve, spreads and sector allocation: in upswings, the portfolio is offensively oriented with a reduced duration and an overweight in corporate bonds; in downturns, however, the focus is on safe government bonds and Pfandbriefe (covered bonds).«