Aviva Investors has unveiled its global credit fund focused on climate change mitigation.
The Aviva Investors Climate Transition Global Credit Fund aims to identify and invest in companies offering goods and services for climate change mitigation and those best-placed to transition to a warmer, lower-carbon world.
The newly-launched product excludes fossil fuel companies and targets solutions providers that generate current or future material revenue by addressing climate-related themes, such as the shift to renewable energy sources, sustainable transport and more environmentally-conscious lending. It will invest in cash bonds and have a long/short CDS basket to target opportunities arising from the market inefficiencies around climate change.
The product has been provided with a $350 million strategic capital allocation from the Aviva Investors UK multi-asset range and the Aviva Ireland multi-asset portfolio.
The fund is benchmarked against the Bloomberg Barclays Global Aggregate Corporates Index, and invest predominantly in investment grade companies, with a small allocation of up to 5 percent in high yield bonds.
It will be co-managed by portfolio managers Tom Chinery and Justine Vroman and climate specialist Rick Stathers. Mr Chinery and Ms Vroman have over 10 and nine years of experience in asset management respectively, while Mr Stathers has studied and worked in climate change for over 25 years.
Commenting on the fund, Colin Purdie, chief investment officer for credit at Aviva Investors, said: “We can’t pivot to a lower carbon world if all we do is rule out the poor performers and only invest in companies that provide solutions to climate change. All companies need to adjust for a warmer, lower carbon world, which is why we felt it was important to use a wider transition lens to capture a larger set of businesses beyond those with obvious green credentials.
He added: “As investors, it is our responsibility to look beyond small pockets of green finance to engage and mobilise the liquidity of the wider credit market to assist in climate transition and the achievement of net zero carbon emissions. Companies that don’t adjust their business models will be less attractive to investors and will present a less compelling investment case over time. Climate laggards may find that their financing becomes more expensive than that available to climate leaders.”
The asset manager hopes the new product will complements the Aviva Investors Climate Transition Global Equity Fund and the Aviva Investors Climate Transition European Equity Fund.
