NN Investment Partners has added to its green bond offering with the NN (L) Sovereign Green Bond fund.
The Dutch asset manager said the latest launch complements its existing range of green bond funds, applying the same investment approach as the NN (L) Green Bond fund, but with a specific focus on treasury and government-related bonds.
It is a sub-fund of NN (L), established in Luxembourg, and authorised by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg.
Selected share classes of the sub-fund are currently registered in Luxembourg, Austria, Switzerland, Germany, Denmark, Spain, Finland, Italy, the Netherlands, Norway and Sweden.
Big expectations
NN IP now offers a full range of green bond funds: aggregate, corporate, sovereign, and an option for a fund with a shorter duration.
The firm launched its first dedicated green bond fund five years ago.
The latest fund coincides with significant growth in issuance, representing a diverse issuer base that NN IP believes will continue to grow exponentially.
Italy recently issued its inaugural green bond in March, while Spain and the UK have announced plans to issue their first green bonds in 2021.
NN IP believes that these developments are creating a market that is well-diversified in terms of issuers and countries, which allows for a well-diversified portfolio with comparable characteristics to a regular allocation to treasuries.
The firm has forecast that global green bond issuance this year could increase by 50% from last year to €400bn, putting the total market above the €1trn mark and expects the global green bond market to grow to €2trn by the end of 2023.
This outlook is supported by the announcement from the EU that 30% of the NextGenerationEU bonds (in total €800bn) will be green bonds.
Broader appeal
Bram Bos, lead portfolio manager green bonds at NN IP: “Whilst in the past, investor demand for green bonds mainly came from impact investors, we now see more typical fixed income investors allocating to green bonds as well.
“These investors are looking to make their portfolio more sustainable without sacrificing financial performance. Offering a broad range of green bond strategies makes this even easier, as it allows them maximum flexibility to allocate to green bonds that replicate the characteristics of traditional bonds in their portfolio.”
