Devon offers short term global green bond fund

Devon Funds has added to its sustainable product range with a green bond offering from Australian fixed income fund manager Artesian Capital Management.

Monday, June 26th 2023, 4:37PM 1 Comment

by Andrea Malcolm

The Artesian Green and Sustainable Bond Fund, which is NZD hedged and currently offers a two year term, has enjoyed a flurry of encouraging pre-launch interest, says Devon head of retail Greg Smith.

The fund, which has Artesian Capital Management as an underlying manager, is structured as a PIE and aimed at retail through financial advisers.

Smith says Devon is talking to several larger financial advisory groups which are interested in putting the fund into their modules, and it has resonated strongly with ethical investment focused advisors.

“Reception has been positive. It has a heavy weighting towards Australia and a short duration as well. The feedback we’ve been getting is that it could serve as a vanilla bond as well as green.”

The Artesian fund strategy is to only invest in bonds labelled green, sustainable and social in a diversified portfolio of Australian and international bonds. The fund universe is currently 47 bonds, split 53% Australia and 45% international plus cash.

Asset classes are green bonds (target exposure 70%), sustainable bonds (target of 15% exposure), social bonds (target 10%), and cash (target 5%).

The Artesian fund is benchmarked to the Bloomberg AusBond Composite 0-5 Yr Index net of fees through active management and has managed to outperform the benchmark by 3.57% in absolute terms since inception in September 2020.

Artesian sees the global (green, sustainable and social) bond market as an opportunity for investors to facilitate positive change. It believes that analysing ESG characteristics enhances traditional credit analysis by providing a broader, enhanced understanding of the risk profile of each issuer.

The rise of the green, sustainable and social bond market and the innovation of sustainability-linked bonds are prime examples of how investor demand, capital market innovation and corporations can foster positive impact, whilst improving returns with quality fixed income investments.

Minimum entry is $10,000 and the management fee is 0.34% plus GST plus a trustee, custody and administration fees capped at 0.25% plus GST. There are no performance fees. New Zealand Guardian Trust has been appointed as supervisor.

Artesian has managed specialised funds focused on credit arbitrage and relative-value strategies across global financial markets since 2004 from its New York, London, Singapore, Shanghai, Melbourne and Sydney offices.

Last year Devon launched two global sustainable funds, Devon Sustainability Fund and the Devon Global Impact Bond Fund both managed by US-based Wellington Management.

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