The Affirmative Global Bond Fund seeks to simultaneously create a positive and verifiable environmental and social impact, whilst targeting a total return in excess of the benchmark after fees over rolling three year periods, in support of the UN Sustainable Development Goals and the global COP 21 Climate Change Accord.
We adopt an active management approach and aim to generate return through three primary sources: currency, yield curve and duration and security selection.
We consider the investment approach to be a combination of active management and strong risk discipline. We seek to add financial alpha and positive environmental and/or social impact. Our process is one of positive selection in identifying and verifying impact fixed income securities that offer attractive financial risk/return characteristics, as well as positive impact, and incorporating these into mainstream portfolio management.
It is our belief that investments should not only deliver strong financial performance, but also solutions to the world’s most pressing environmental and social challenges. Our investment philosophy is based on three core commitments:
- A focus on fixed income investments that generate positive environmental impact and social externalities.
- Fundamental fixed income discipline with no compromise on returns.
- Transparent impact reporting.
Our verification process includes both sustainability and credit assessments. Our investment universe encompasses green, social and sustainable bonds. These bonds are defined as bonds supporting environmental and social activities/projects, and we can also include unlabelled bonds by highly sustainable and responsible issuers. The verification process is one of positive selection to identify and screen both issues and issuers for meaningful and measurable impact. We invest only in bonds that fulfil our stringent criteria. These include credit worthiness of the issuer, environmental/social benefits and the ability to determine that proceeds are dedicated to positive impact.
While our universe is wider than green bonds, they currently represent the most significant portion of our investable universe. Green bonds are conventional debt instruments whose proceeds fund projects that help the world mitigate or adapt to climate change. Mitigation reduces and stabilises greenhouse gas emissions, e.g. renewable energy and low carbon transit, while adaptation helps communities and ecosystems adjust to new climate extremes, e.g. resilient infrastructure and water management.
Our verification process encompasses both our sustainability and credit teams review. They build the SPECTRUM Bond® and SPECTRUM aligned universe of eligible bonds for the portfolios through positive selection across the following criteria:
Aligned with our purpose to support the UN SDGs and Paris Agreement on Climate Change.
P OSITIVE EXTERNALITIES Positive environmental and/or social externality associated with their issuance. Criteria include: social and environmental sectors, geographical and socio-economic context, policy and strategy context.
E THICS & ISSUER CONDUCT Issuers must have appropriate governance, policies and operational conduct. Criteria include: human resources management, tax transparency, marketing practices and technology resilience.
C REDIT Issuers must be credit worthy from a financial perspective. Criteria include: industry outlook, competitive position, country risk.
T RANSPARENT Clear and transparent investment policies and processes on reporting and disclosure. Criteria include: disclosure of project portfolio, project assessment disclosure, commitment to output reporting.
R ESPONSIBLE ISSUER Issuers with strong integrity and ESG standards, as well as a clear commitment to a sustainable model. Criteria include: positive ESG policies, programs and performance.
U SE OF PROCEEDS Ability to determine use of proceeds in the issuer framework to assure funded activities meet the AIM criteria. Criteria include: separate accounting for impact bond proceeds, external review, project alignment.
M EASURABLE IMPACT All securities must offer mainstream market yields and provide reporting on the material & measurable environmental and social impacts. Criteria include: impact KPIs, baseline and target disclosures, impact reports to stakeholders.
The strategy is a diversified investment grade portfolio seeking to generate positive environmental and social impact alongside mainstream fixed income returns.
- AIM is one of the world’s first dedicated Green and Impact Bond funds management company. AIM has a team of 21 investment professionals, the senior members of which each have 25 years plus experience.
- In house proprietary analysis
- ESG is at the core of our approach, not an overlay to existing processes.
- A core part of AIM's differentiate approach is the expectation for issuers to report on the impact from activities funded by the bond proceeds. AIM aggregate this impact data reported by different issuers and provide a comprehensive report to summarise the impacts of their investment portfolios. This differentiates the offering versus traditional Fixed Income peers, as it drives focus on how bond proceeds have been used to fund various sustainability projects.