New social bond fund meets “growing demand”

Written by Rebecca O'Connor on 24th May 2017

Colombia Threadneedle, one of the UK’s biggest fund managers, has launched its first European social bond fund.

Following the launch of the Threadneedle UK Social Bond fund in 2013 with Big Issue Invest, and its US Social Bond fund in 2015, the asset manager has launched the Threadneedle (Lux) European Social Bond fund, which aims to delive a financial and a social return by investing in corporate bonds that focus on supporting positive outcomes for individuals, communities or society as a whole.

We strongly believe that investors need not sacrifice performance to achieve social impact.

The Fund is managed by Simon Bond, director of responsible investment portfolio management at Columbia Threadneedle Investments in London and Manager of the UK Social Bond fund.

Simon said: “We are seeing a growing demand from clients to deploy their savings in a way that can generate social benefits and sustainable positive outcomes. At the same time, we strongly believe that investors need not sacrifice performance to achieve social impact.

“We have a proven track record of over three years in managing outcomes-focused social bond strategies with strong risk-adjusted returns. Out of 4,000 European corporate bonds in the market, we have identified that approximately 45 per cent are social in nature across different sectors and countries. By actively selecting specific bonds with positive social outcomes, rather than excluding bonds through conventional negative screens, we aim to generate positive social and financial results. The portfolio also offers daily liquidity, therefore opening it up to a wide range of investors.”

The fund takes an evidence-based approach according to a defined social opportunity framework, aligned with the United Nations Sustainable Development Goals (UNSDG) and covering social areas such as affordable housing, health, education and employment.

In a similar manner to the UK Social Bond fund, which is independently advised by Big Issue Invest, Columbia Threadneedle Investments has partnered with INCO, a Paris-based global consortium for a new, inclusive and sustainable economy. INCO has a strong network across continental Europe and is active in four main areas all supporting social development: investment, incubation, training and events. INCO acts as an independent adviser to the new, Luxembourg-registered fund.

INCO’s founder, Nicolas Hazard said: “As a leading European Impact Investing organisation, INCO is proud to provide its expertise in the field of social and environmental evaluation to Columbia Threadneedle Investments. This partnership shows a common desire to support organisations that make a positive change in their community, whether they are companies, local authorities or non-profits. It fosters our ambition to build a more inclusive and sustainable finance industry.”

The fund builds on the strong foundation and success of Columbia Threadneedle Investments’ social bond strategies and the firm’s long-term active investment approach, incorporating best-in-class credit research and Environmental, Social and Governance (ESG) analysis, combined with INCO’s social development expertise and network in Europe.

The fund is intended for distribution across other markets (UK, Austria, Belgium, Finland, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and Switzerland) pending regulatory approval.

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