Fixed Income and ESG - A Strategic Fit
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Fixed Income and ESG - A Strategic Fit

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Wolfgang Pinner, Head of SRI - Erste-Sparinvest KAG - Austria.

Wolfgang Pinner, Head of SRI - Erste-Sparinvest KAG - Austria.

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Fixed Income and ESG - A Strategic Fit Fixed Income and ESG - A Strategic Fit Presentation Transcript

  • Workshop 11 – Fixed Income ‘ Fixed Income and ESG - A Strategic Fit ’ Wolfgang Pinner, MBA
  • Agenda ERSTE-SPARINVEST Overview Market acceptance and performance Characteristics of SRI bond vs equity management Fact sheets and contact details
  • WWF… Partner for thematic funds VINIS… Brand for sustainable funds V erantwortung (Responsibility) , I nnovation , N achhaltigkeit (Sustainability) , I nvestment , S icherheit (Safety) ESPA VINIS BOND ESPA VINIS STOCK AUSTRIA ESPA VINIS STOCK EUROPE ESPA VINIS STOCK GLOBAL ESPA WWF STOCK UMWELT ESPA WWF STOCK CLIMATE CHANGE 2001 2002 2003 2004 2005 2006 2007 ESPA VINIS STOCK EUROPE-EMERGING 2008 ESPA’S fund management has long term experience in SRI ESPA VINIS CASH Timeline Responsible Investment Funds
  • The ESPA VINIS management concept
  • Agenda ERSTE-SPARINVEST Overview Market acceptance and performance Characteristics of SRI bond vs equity management Fact sheets and contact details
    • Ratings of issuers
    • Liquidity of bonds
    • Engagement & voting
    • Is sufficient (SRI)research available?
    • Which styles of SRI (screening, best-in-class etc.) fit best?
    Questions for day-to-day SRI fixed income management
    • Ratings of issuers
      • corporate bonds = equity rating?, covered bonds = equity rating?, government bonds = separate rating?
    • Liquidity of bonds
      • unforeseen liquidity trap more likely than in case of equities
    • Engagement & voting
      • engagement is possible, but rather unusual
    • Is sufficient (SRI)research available?
      • availability has improved, but still lags that of equity ratings
    • Which styles of SRI (screening, best-in-class etc.) fit best?
      • Screening is easier to explain, best-in-class for governments has rather low visibility
    SRI equity versus fixed income management
    • Risk: elimination of FX risk – focus on Euroland
    • Diversification: inclusion of corporates (financials and industrials), collateralized bonds and supranationals, government bonds
    • Rating category: investment grade (better SRI-research coverage and ratings)
    • Screens: fixed-income specific exclusionary screens (death penalty, freedom of association, human rights, labour rights, nuclear power, nuclear weapons) and positive screens (climate change politics) for sovereign and non-sovereign issuers
    • Performance: dependence on spread investments
    • Sustainability focus: add other sustainable topics (micro finance etc.)
    Designing an SRI bond or cash product
  • Agenda ERSTE-SPARINVEST Overview Market acceptance and performance Characteristics of SRI bond vs equity management Fact sheets and contact details
    • Diversification: the asset class SRI is regarded as different with regards to risk/return characteristics
    • Pure SRI portfolios: fixed income plays an important role at least in portfolios on the European continent
    • Performance: SRI portfolios show no underperformance versus traditional products, primarily the ‘information effect’ leads to advantage in performance
    • Exclusionary criteria: traditional exclusions for fixed income like death penalty and ILO standards become best practice
    Driving forces for SRI fixed income products
  • The essential characteristics of sustainable investments are also strong arguments for SRI Main Arguments for SRI Positive Neutral Slightly Negative Information Effect Anticipation Effect Positive Selection Effect Small Companies Effect Diversification Effect
  • Performance history of ESPA VINIS BOND – since inception ESPA VINIS BOND versus government resp. corporate benchmark
  • Performance history of ESPA VINIS BOND – for 2008 ESPA VINIS BOND versus Fixed Income sub asset classes 12/2007 12/2008
  • Agenda CEE Overview Market acceptance and performance Characteristics of SRI bond vs equity management Fact sheets and contact details
  • ESPA VINIS BOND Ratios (monthly/ 36 month): Volatility /STABW (1 year): Tracking Error: Beta (1 year): Corr.coef.: Convexity:
    • Performance per 30.04.09 (since 31.12.08):
    • relative Performance:
    • Performance per 30.04.09 (since 28.02.05)
    • relative Performance:
    2.760 % 0.706 % 0.914 0.971 43.404 Time to maturity Type: Fixed income fund, Stile: SRI ISIN: (T) AT0000686084, (A) AT0000A01G95 Benchmark: Customized Composite Management fee: 60 Bp Volume per 30.04.09: EUR 66,0m Kennzahlen: Performance since 01.01.2006 + 1.19 % - 0.95 % + 10.07 % - 6.41 % Yield: Average yield: Duration: Modified Duration: 4.76 % 6.38 years 5.10 years 4.87 %
  • ESPA VINIS CASH Ratios straight bonds: Average yield: Average coupon: Average time to maturity: Duration: 4.08 % 5.08 % 2,33 years 2,17 years Type: Money market fund, Stile: SRI ISIN: (T) AT0000A03969, (A) AT0000A03951 Benchmark: 3-Mo-Euribor Management fee: 24 Bp Volume per 30.04.09: EUR 29,7m Ratios money market FRNs: Perforrmance since 01.01.2007 Average coupon: Average time to maturity: Duration: Average spread: 2.33 % 3.64 years 0.17 years 521.5 Bp. Fund breakdown
    • Performance per 30.04.09 (since 31.12.2008):
    • relative Performance:
    • Performance 2007:
    • Performance 2008:
    - 0.61 % - 1.46 % + 2.64 % - 2.91 %
  • Wolfgang Pinner, MBA, Head of Sustainability Funds Degree of a Mag.rer.soc.oec. from Vienna University of Economics and BA (comparable to ‚master‘ degree in UK) 1989 Analyst at Erste Bank 1988 Lecturer at Vienna University of Economics and Business Administration, University of Linz, University of Applied Sciences in Vienna Activities Head of Research Erste Bank 1992 Chief Strategist Investment Bank Austria (1997 merged with CAIB) 1996 Chief Investment Officer VBV pension fund 2001 CEO of VINIS (consulting company for SRI investments) 2006 Head of Sustainability Funds at ERSTE-SPARINVEST KAG / Vienna 2007 Executive MBA University of Nottingham 2007 Education Experience
  • Disclaimer This presentation was prepared for your personal use and for information purposes only. Any form of reception, publication, duplication or dissemination of the content by anyone other than the designated addressee is prohibited. The presentation was not prepared with the intention to give legal or tax advice. We cannot be held liable for the completeness, reliability, and accuracy of the material or any other information that is passed on or made accessible to the addressee either in writing, orally, or in any other form. We assume the data that are contained in this presentation on the basis of publicly available information to be accurate, but they have not been verified independently. The contents of this presentation are not legally binding, except where the presentation or parts thereof are confirmed in writing to this effect. The statements made to the addressee are subject to the provisions of the underlying offer or agreement, if any. Past performance is not necessarily indicative for future income. We cannot guarantee that a portfolio will achieve the gains or losses exemplified or that a projection will predict the actual performance of a portfolio with the same degree of accuracy as earlier projections. In contrast to the actual development of the portfolio, simulations are not based on actual transactions – hence their significance is limited. Since no actual trading takes place, the influence of some market factors cannot be modelled adequately, such as for example liquidity shortages. Agenda