Amundi has said that the Hong Kong Securities and Futures Commission (SFC) has authorised its Emerging Markets (EM) Green Bond for sale to retail investors.
“Investors are increasingly pursuing investment solutions which deliver attractive returns potential while targeting environmental impact,” said Maxim Vydrine, the fund’s lead portfolio manager and co-head of EM corporate & high yield debt at Amundi at a press briefing this week.
“The fund provides investors exposure to green projects in EMs through corporate bonds, and it offers diversification across sectors as well as countries.”
The Luxembourg-domiciled Amundi Emerging Markets Green Bond Fund invests in 119 holdings in over 25 countries, according to the fund factsheet. The bonds have an average rating of BB+, and an average portfolio ESG rating of C-.
Country allocation is focused on Brics, with the top three exposures being India, Brazil and China. In terms of sector breakdown, utilities is the most dominant with a 26.6% weighting, followed by banks and building (12.2%) and real estate (9.7%).
“The fund also has some flexibility to invest in sustainable bonds, whose proceeds can be used to finance both environmental and social projects”, said Vydrine.
Growing demand for green bonds
With rising awareness of green bonds for both issuers and investors, EM green bond issuance is expected to double in the next three years compared with the previous three years, exceeding $100bn in annual issuance by 2023, according to research by Amundi.
“Knowing that there is a shortage of green bond globally, a lot of issuers in the EM, in both the sovereign and the corporate space, are taking advantage to tap into the green and ESG bond market,” said Esther Law, senior investment manager of EM debt at Amundi.
According to the firm’s research, the outstanding global EM green bond universe is headed by China with $120bn, followed by South Korea and India.
Hong Kong now has 59 green and ESG mutual funds, and three exchange-traded funds, according to the SFC website.
First published in December 2019, the list of ESG-approved funds includes products that meet new ESG disclosure requirements aimed at countering greenwashing. These disclosure requirements include the fund’s key investment focus, ESG analysis and evaluation methodologies, and what the firm believes to be relevant “green” or ESG criteria.
Other funds approved this year include the BOCHK All Weather ESG Multi-Asset Fund and the Blackrock Circular Economy Fund, and Amundi also manages another ESG-approved product, the Green Planet Fund, which is eligible for investment in Hong Kong’s mandatory provident fund.
Amundi has total AUM of $2.13trn as of 30 June, according to the French fund manager’s website.