Fidelity International has launched a ‘blue transition’ bond fund as part of its ongoing commitment to sustainable investing.

Then firm stated that its Fidelity Funds 2 - Blue Transition Bond Fund was the first blue transition fixed income fund to launch globally, according to its market analysis.

The ‘blue transition’ aims to balance ocean, coastal, and in-land river system usage and resources with the conservation of healthy and productive marine and freshwater ecosystems.

Fidelity stated that while oceans and freshwater played a crucial role in regulating climate, providing foods and livelihood, and supporting diverse ecosystems, the United Nations Sustainable Development Goal (SDG) ‘life below water’ was the least funded SDG.

Its fund aims to achieve capital growth over the long term, focusing on supporting the transition towards improved ocean and freshwater health.

It invests in global bonds or bonds of issuers that contribute to ocean and freshwater objectives aligned with one or more SDG, use bond proceeds to finance projects benefits water-related sustainability, aims to improve management of water-related risks and opportunities, and reduce the negative impact of climate change on the ocean or freshwater.

A minimum of 80 per cent of the fund’s investments are used to meet the environmental or social characteristics promoted by the fund, Fidelity stated.

The fund will be managed by Kris Atkinson and Shamil Gohil, who together have over 42 years’ experience and are backed by Fidelity’s global investment and sustainable investing resources.

The launch follows Fidelity's broader commitment to developing thematic fixed income investment solutions that address climate change, social issues and the broader UN SDGs.

“The bond market is uniquely positioned to help support the blue transition, given its size and greater number of issuers across both public and private entities in the corporate and sovereign issuer space,” commented Fidelity International portfolio manager, Kris Atkinson.

“We are particularly focused on blue bonds, a sub-component of the green bond market, which finance ocean and freshwater related projects. However, blue bonds alone are not sufficient for investors looking to support ocean and freshwater themes while aiming to generate attractive risk-adjusted returns.

“A broader more holistic approach needs to start at the issuer level, investors should consider how a company operates, which products and services it offers, and how these align to the blue transition.

“The blue transition is a global challenge and so our approach is global too, covering the broadest fixed income investment universe possible. As credit investors we need to ensure we back our principal and interest, so we use Fidelity’s vast and experienced team of investment professionals to screen out bonds which don’t meet our credit fundamental and valuation thresholds.

“The result is a globally diverse, high-quality, fixed income portfolio which helps to support the blue transition.”

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