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Julien Bras : « We have about one hundred securities, with 89 % of our assets invested in green bonds »

According to Julien Bras, co-fund manager of the Allianz Green Bond fund, the strategy invests primarily in green bonds issued by companies, government agencies and supranational entities...

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Next-Finance : In which context the Allianz Green Bond fund was launched?

Julien Bras : The fund was launched in November 2015, shortly before the Cop 21 held in Paris. The idea of Allianz Global Investors was to create a product that goes beyond the existing SRI funds and an investing impact strategy.

Do you think that the current interest in green bonds is going to increase? What are the projections of Allianz Global Investors about it ?

It is clear that there is a growing interest in green bonds, in Europe and the United States or in Asia. Moreover, this market segment has grown very rapidly over the recent years: its assets now reach nearly 200 billion euros in the world against 10 billion euros, four years ago. For this year, we estimate that green bonds issuance will reach or exceed 100 billion euros.

How is built your portfolio ? What criteria are used to select your securities? Do you have a maximum weight per security?

The strategy invests primarily in green bonds issued by companies, government agencies and supranational entities. We have no constraints regarding the maximum weight per security but currently our largest exposures do not exceed 2,5 %. On the other hand, we use several criteria to select the securities in our portfolio, in particular to ensure that the funds raised have a significant environmental impact.

On the other hand, we use several criteria to select the securities in our portfolio, in particular to ensure that the funds raised have a significant environmental impact.
Julien Bras, co-fund manager of the Allianz Green Bond fund

What is diversification in the portfolio given the fact that green bonds are generally issued by a limited number of companies?Do you have a benchmark?

At present, we have about one hundred securities, with 89 % of our assets invested in green bonds, the balance being held in corporate bonds meeting strict the ESG criteria, and more specifically which have a very strong environmental performance, particularly those in the industry sector where few companies generally issue green bonds. For our benchmark, this is the BofA Merrill Lynch Green Bond Index (hedged in euros).

What is the fund’s performance and risk level since inception? What is the level of its assets under management?

Since inception - in November 2015 - the annualized return has reached 5,9 % for an annual volatility of 2,5 %, with 110 million euros of assets under management at the beginning of September 2017.

Since inception - in November 2015 - the annualized return has reached 5,9 % for an annual volatility of 2,5 %...
Julien Bras, co-fund manager of the Allianz Green Bond fund

Does a maximum capacity in terms of size? What about fees and liquidity?

Given the significant growth of the green bonds market, it is difficult to estimate our exact maximum capacity but it is clear that we still have some room for capital inflows. In terms of fees, the cheapest share class for institutional investors has an annual management fee of 0,42 %.

RF , September 29

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