Inaugural Altius Green Bond Fund Backed by CEFC
(08 July 2020 – Australia) The Clean Energy Finance Corporation (CEFC) will invest A$70 million in the first Australian managed green bonds fund as the domestic ethical investment market marches forward.
Australian Unity’s Altius launched the CEFC backed fund to sophisticated and institutional investors, providing access to about 30 corporate and government bonds with proceeds directed to projects for the reduction of CO2 emissions. Altius has a strong background in the sustainable fixed income market, launching a sustainable bond fund in 2014 of which a third is comprised of green bonds.
It is the first managed fund on the Australian market dedicated almost exclusively to green bonds following similar initiatives led by the European Union (EU). Christine Lagarde, European Central Bank (ECB) President, has opened the door to using its €2.8 trillion asset purchase scheme to pursue green objectives, promising to examine changes to all of its operations in the fight against climate change. The move would make the ECB the first main central bank to use a flagship bond-buying programme to pursue green objectives.
The CEFC will hold over one third of the new fund's total assets under management (AUM). The green and social bond market in Australia has expanded since commencement in 2014 to reach A$20 billion in issuance as of Q1 2020, according to recent ANZ data.
The fund is 98 percent comprised of green and social bonds, of which 37 percent have been issued by state and territory governments, 36 percent by corporates, 20 percent as supranational initiatives of global central banks, and five percent residential mortgage-backed securities (RMBS). The fund has a remaining two percent allocation to cash. The fund targets a return of 0.3 - 0.5 percent above the composite bond index over a rolling three year period and charges investors 0.3 percent pa without charging a performance fee.
"It is really exciting and reflects the maturing of the market and the greater number of green and climate bonds that are that are on issue here in Australia” stated CEFC CEO Ian Learmonth.
"We're keen for flows of capital that come right across the investor spectrum into the clean energy sector. Because ultimately, there's a great deal of investment required to decarbonise the economy both here in Australia and around the world, and the more that we can create investible products, the better” Mr Learmonth added.