Invesco launches Climate Opportunities Bond fund
Invesco has unveiled a new climate-friendly bond fund that will invest for income and growth while supporting the transition to a low-carbon global economy, in the group’s first launch since long-time co-heads of fixed interest Paul Causer and Paul Read stepped back at the end of last year.
The Invesco Environmental Climate Opportunities Bond fund will invest in a portfolio of bonds issued by companies assessed to have strong climate characteristics.
Levying an annual charge of 0.45% for the Z-class shares, the fund is managed by new co-head of the £25bn Henley fixed interest team, Michael Matthews, and fixed income fund manager Tom Hemmant.
The fund will primarily target corporate issuers in the investment grade, high yield and emerging markets sectors, while also including government bonds for risk management and liquidity purposes.
The climate element of the fund will involve it seeking companies with high emissions that have significant potential to reduce their carbon output.
It will also invest in green, transition and sustainability-linked bonds that aim to raise funds for climate-friendly projects, as well as companies that have made commitments to net-zero carbon emissions.
It will exclude businesses that derive a specified proportion of their revenues from non-sustainable sources, such as companies where thermal coal extraction generates more than 5% of revenue.
Henley fixed interest team co-head Matthews (pictured) said: ‘To meet the commitments outlined in the 2015 Paris Agreement the world will have to undergo a rapid decarbonisation of economic and social activity on an unprecedented scale.
He added: ‘The financing requirements are enormous and the level of support needed to improve clean energy and energy efficiency presents a huge opportunity for investors.
‘Our blended approach to climate investing seeks to capitalise on this opportunity by focusing on issuers with strong climate characteristics and an attractive potential return profile.’
The strategy will be supported by Invesco’s environmental, social and governance (ESG) team led by Cathrine de Coninck-Lopez, which has added eight new members in the last year.
The launch is the first Invesco bond launch since Citywire revealed the veteran heads of the franchise, Paul Causer and Paul Read, were retiring last year.
Invesco head of UK distribution Alexander Millar said the fund has been launched in response ‘to substantial client demand’ for a strategy leveraging the firm’s fixed income and ESG capabilities.