Union Investment has launched a global convertible bond fund pursuing sustainable investments for institutional investors, the UniInstitutional Global Convertibles Sustainable.
Its investment universe comprises international convertibles and warrant-linked bonds, fixed and floating rate paper, money market instruments and derivatives.
Investments not denominated in euro will largely be hedged.
Fund manager Sven Hölzer will seek companies that meet defined sustainability criteria, such as International Labour Organization standards, and do not breach any human rights.
His screening criteria for government bonds include undemocratic regimes or widespread corruption in an issuing country.
"The corporate-bond characteristics of convertibles provide investors with consistent income in the form of coupon payments, as well as a fixed minimum redemption amount,” says Hölzer.
“At the same time, the embedded equity call options offer unlimited participation in equity returns."
Hölzer adds that this investment strategy allows him to generate equity-like earnings with less downside risk."
The UniInstitutional Global Convertibles Sustainable is a Luxemburg-domiciled mutual fund that is only accessible for institutional investors.
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