Triodos Sustainable Bond Fund

Investment policy

In 2016 the sub-fund reduced its underweight position in sovereign bonds and mainly invested in German, French and Belgian government issues. In France positions were shifted to inflation-linked bonds.

In the sub-sovereign bond segment the steepening of the yield curve was used to extend the maturity of the positions in Agence Française de Développement and Nederlandse Waterschapsbank. In this same category the positions in agencies and public banks were reduced, while those in regional bonds were raised.

The allocation to collateralised bonds was reduced, as was the position in corporate bonds. More specifically, the sub-fund reduced its holdings in Banks, Household & Personal Products and Industrial Goods & Services. The overweight position in Cars & Automotive Components was reduced in favour of the underweight position in Telecom.

The sub-fund also participated in the new issue of bonds with a 2025 maturity date by Verizon Communications and participated in bond issues by Adecco, ASML and Terna. The holdings in DNB Boligkredit and Daimler were sold because these companies no longer met the fund’s sustainability criteria. The positions in BMW, Heineken, Kering and SCA were reduced.

For the purpose of diversification and because of their attractive risk premiums, bonds issued by companies that included Atlas Copco, BT, Deutsche Börse, Evonik Industries, Ford Motor, Merck, Valeo and Vodafone were added to the portfolio.

On balance, the average rating of the portfolio improved to AA2, compared with AA3 in 2015.

Breakdown by risk category as at December 31, 2016 (as a % of portfolio)

Triodos Sustainable Bond Fund – Breakdown by risk category (pie chart)

Breakdown by duration as at December 31, 2016 (as a % of portfolio)

Triodos Sustainable Bond Fund – Breakdown by duration (pie chart)

Top 5 sub-sovereign and corporate bond holdings as at December 31, 2016

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Name

% of net assets

 

 

 

1.125%

Kreditanstalt für Wiederaufbau 2013–2018

3.2

2.250%

European Investment Bank 2012–2022

2.5

2.500%

Kreditanstalt für Wiederaufbau 2012–2022

2.3

4.750%

European Investment Bank 2007–2017

2.0

2.375%

Compagnie de Financement Foncier 2012–2022

1.7

 

 

Top 5 sovereign bond holdings as at December 31, 2016

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Name

% of net assets

 

 

 

3.500%

French Government bond 2009–2020

3.5

0.250%

German Government bond 2014–2019

2.6

0.500%

German Government bond 2015–2025

2.5

2.750%

French Government bond 2012–2027

1.8

3.250%

French Government bond 2010–2021

1.8

 

 

Performance

In 2016, the total net assets of Triodos Sustainable Bond Fund grew from EUR 352.6 million to EUR 372.9 million. During this period, the sub-fund (R-Dis) realised a return of 2.5% (including reinvestment of dividends), while the benchmark rose 3.3%.

The main contributions to the sub-fund’s return came from bonds issued by financial institutions. Corporate bonds as well as (sub-) sovereign bonds even outperformed the benchmark. The return on bank bonds and collateralised bonds lagged behind the benchmark. Real estate, on the other hand, outperformed. Within the corporate bond segment, holdings in Cars & Automotive Components, Chemicals and Construction & Materials made a positive contribution. Negative contributors included Utilities and the absence of the Oil & Gas and Materials sectors in the portfolio.

Performance based on net asset value as at December 31, 2016
(including reinvestment of dividends, including costs)

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Morningstar
rating

1 year

3 year p.a.

5 year p.a.

10 year p.a.

Since inception p.a.1

 

 

 

 

 

 

 

 

1

The inception dates can differ between share classes.

2

The Z-share class and the I-share class have a limited history. Returns prior to the launch of these share classes are based on the returns of the comparable R-share class.

3

These are the historical figures of the former Triodos Meerwaardefonds NV, which merged into Triodos SICAV I on June 28, 2010.

4

Excluding costs.

 

n/a: not applicable

Triodos Sustainable Bond Fund I-Cap

★ ★ ★

3.0%

3.7%

3.7%

n/a

4.1%

Triodos Sustainable Bond Fund I-Dis

★ ★ ★

3.0%

3.7%

3.6%2

3.4%2

4.3%2

Triodos Sustainable Bond Fund R-Cap

★ ★ ★

2.6%

3.3%

3.2%

n/a

3.7%

Triodos Sustainable Bond Fund R-Dis

★ ★ ★

2.5%

3.3%

3.2%

3.2%3

4.2%3

Triodos Sustainable Bond Fund Z-Cap

★ ★ ★

3.0%

3.7%

3.5%2

n/a

3.9%2

Triodos Sustainable Bond Fund Z-Dis

★ ★ ★

3.0%

3.7%

3.5%2

3.4%2

4.2%2

Benchmark: iBoxx € Non-Sovereigns Index (60%),
iBoxx € Sovereigns Index (40%)4

n/a

3.3%

4.6%

5.4%

4.7%

5.0%

 

 

 

 

 

 

 

Evolution of returns Triodos Sustainable Bond Fund

Evolution of returns Triodos Sustainable Bond Fund (line chart)

* Since 2010 the sub-fund also invests in sovereign bonds in order to improve the bond portfolio’s diversification and liquidity.

** Figures given for the R-share classes are the historical returns of Triodos Meerwaardefonds NV, which merged into Triodos SICAV I on June 28, 2010.

*** Triodos Sustainable Bond Fund aims to achieve returns that are in line with the market. The sub-fund compares its return and the sustainability scores (environment, social and governance) of the companies in which it invests with the iBoxx € Non-Sovereigns Index (60%) and the iBoxx € Sovereigns Index (40%). These are generally accepted indices for (non-sustainable) worldwide diversified bond funds. The investment policy that is pursued by Triodos Sustainable Bond Fund is not aimed at replicating or outperforming the benchmark in the short term. The sub-fund may deviate from the benchmark because it only invests in companies that meet its strict sustainability criteria. The fund believes that in the longer term sustainable investments offer more stable and higher returns than non-sustainable investments. The fund therefore tends to invest in companies on the basis of a long-term investment horizon.

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