The simulated return is calculated gross of any fees or trading costs for the period from 31.07.2021 to 31.07.2022. No specific assumptions on external cash flows are made. The simulated return has NOT been achieved in reality and is not GIPS compliant. The expected return is NOT an indicator of future actual results
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A new investment opportunity in CHF sustainable bonds
As part of our long-standing strategic commitment to sustainable investments and our target to build-up to a full ESG offering, we launched a new sustainable investment strategy for Swiss investors covering Swiss bonds.
Sustainable investing is the future
Sustainability considerations can have significant impact on corporate performance. Evidence demonstrates that sustainability related factors can bring a real value while investing in companies meeting ESG standards. Moreover, the quality and quantity of ESG data in the fixed income world is improving and innovating rapidly. In this context, Pictet Asset Management is pleased to announce the addition of a new sustainable investment fund to the range of the active CHF Bonds funds.
The Pictet CH – CHF Sustainable Bonds is a new active fund launched the 25th of February 2021. It is managed by the CHF Bonds Team which has an extensive experience in managing active CHF Bonds portfolios as well as sustainable portfolios.
It was designed with the objective of matching clients’ needs on sustainable investment solutions in combination with our belief that ESG research and analysis can bring a real added value to the portfolio construction by mitigating risks and helping generate excess return.
Main characteristics
The reference index to this fund is the Swiss Bond Index AAA-BBB. The investment objective is to generate steady positive excess return to the reference index, while respecting the a well-defined ESG approach. Within the investable universe respecting ESG standards, the fund invests in high conviction strategic and fundamental active strategies with a strong focus on capital protection discipline. The fund will only invest in the investment grade space. The target yearly excess return of the fund is 0.40%.
ESG approach shaping the investment universe
The Swiss Bonds Index respects the Swiss Association for Responsible Investment (SVVK/ASIR) exclusion list and the Pictet Group exclusion list on anti-personnel landmines, cluster munition, chemical, biological and nuclear weapons. We apply this exclusion lists completed by additional ESG investment guidelines to current and potentially new entries in the index. This additional guidelines are summarized as follows:
We invest in companies that demonstrate robust ESG practices and/or that generate a substantial share of revenues from products and services beneficial to society and/or the environment. We use multiple internal and external data to optimize the ESG approach. We achieve that through a four layered process.
Exclusion
We first focus on excluding companies whose products and services are linked to weapons, coal, tobacco, alcohol, gambling, adult entertainment with a threshold of 5% of revenues, and nuclear with a threshold of 25% of revenues.
Best-in-class
We include companies with high ESG overall scores considering environment, social, governance and labor aspects. Furthermore, we include companies with no major controversies and low carbon footprint. To screen the investment universe, we rely in data from Inrate, Sustainalytics and Trucost. This step excludes from our investment universe mainly oil, gas, auto, pesticides, GMOs, palm oil and some financial companies.
The negative and positive screening from exclusions and best-in class reduce the investable universe to 90% of the market capitalization, 86% of corporate market capitalization and 74% of the number of corporates of the index.
Integration
We integrate ESG factors in our credit analysis for the remaining investable companies and determine if these factors are fairly priced in the market. In our bottom-up company selection, we integrate ESG factors such as governance, controversies and accounting standards. For this purpose, we use various ESG data providers such as Sustainalytics scores and reports (covering E, S and G), ISS Governance scores and reports (covering G) and CFRA Creative Accounting reports. These ratings and reports are integrated into our portfolio management system. ESG rating alerts have been put in place by risk management team to quickly identify a deterioration or improvement in these ratings. All teams at Pictet Asset Management have a breakdown and evolution of ESG ratings formally incorporated into their performance reviews with the Chief Investment Officer.
Engagement
As a firm, we engage with companies that do not meet our ESG evaluation criteria but have the potential to improve in order to achieve a positive outcome within a certain timeframe. Our ESG evaluation is based on a combination of proprietary and external research. We practice targeted, collaborative and outsourced engagement in addition to direct engagement during company meetings.
Pictet Asset Management has formulated a concrete process for corporates and sovereigns to positively influence ESG performance. Key criteria are the severity of ESG concern(s) and the likelihood of successfully influencing the issuer. The process is enhanced through a subscription to a third-party service provider.
Return projections
The yield to maturity of the fund is 0.01% (as of 31.07.2021). The yield to maturity of the fund is currently higher than the one of the index by 0.30%. This is mainly due to an overweight in investment grade credit. The fund has a duration of 7.3 years. Under the assumption that interest rates and credit spreads stay at current levels the expected total return* of the fund (including the expected excess return) is 0.83%.
learn more responsible investing and about swiss bonds
The case for responsible investing
Laurent Ramsey argues that investors can better manage long-term risks and seize growth opportunities by integrating environmental social and governance criteria into their investment framework
Active management
Aiming for steady positive excess return in all market environments.
September 2021
Our team
Following a team approach with clear responsibilities
June 2021
The value of CHF bonds in multi asset portfolios
Reasons why Swiss investors should be invested in CHF bonds.
September 2021
Passive management
Focus on low risk and cost efficiency.
July 2021
Important legal information
This marketing material is issued by Pictet Asset Management (Europe) S.A.. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The latest version of the fund‘s prospectus, Pre-Contractual Template (PCT) when applicable, Key Information Document (KID), annual and semi-annual reports must be read before investing. They are available free of charge in English on www.assetmanagement.pictet or in paper copy at Pictet Asset Management (Europe) S.A., 6B, rue du Fort Niedergruenewald, L-2226 Luxembourg, or at the office of the fund local agent, distributor or centralizing agent if any.
The KID is also available in the local language of each country where the compartment is registered. The prospectus, the PCT when applicable, and the annual and semi-annual reports may also be available in other languages, please refer to the website for other available languages. Only the latest version of these documents may be relied upon as the basis for investment decisions.
The summary of investor rights (in English and in the different languages of our website) is available here and at www.assetmanagement.pictet under the heading "Resources", at the bottom of the page.
The list of countries where the fund is registered can be obtained at all times from Pictet Asset Management (Europe) S.A., which may decide to terminate the arrangements made for the marketing of the fund or compartments of the fund in any given country.
The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments or services.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. The management company has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested.
The investment guidelines are internal guidelines which are subject to change at any time and without any notice within the limits of the fund's prospectus. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a specific security is not a recommendation to buy or sell that security. Effective allocations are subject to change and may have changed since the date of the marketing material.
Past performance is not a guarantee or a reliable indicator of future performance. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares.
Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on assetmanagement.pictet in the “Resources” section of the footer. This document is a marketing communication issued by Pictet Asset Management and is not in scope for any MiFID II/MiFIR requirements specifically related to investment research. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any products or services offered or distributed by Pictet Asset Management.
Pictet AM has not acquired any rights or license to reproduce the trademarks, logos or images set out in this document except that it holds the rights to use any entity of the Pictet group trademarks. For illustrative purposes only.