During a year of global economic volatility, Ping An's China Green Bond Fund adjusted its portfolio duration through cash management instruments such as treasuries and bills to counteract the lower issuance of green bonds.
It also repositioned into "higher quality" issuers in order to reduce underlying volatility.
While the fund delivered a negative return of -3.36% last year, Ping An said these measures helped it outperform its global, US and emerging market fixed income counterparts: the Bloomberg Global Aggregate Credit Index, the US corporate Index and the EM USD Index.
Launched in 2019, the fund is one of the few Asia-focused green bond funds that has a track record longer than three years. At least 80% of the fund is fixed income instruments that the Climate Bonds Initiative has deemed 'eligible green'. The remainder are bonds that are being reviewed or have been classified green under other standards.
One bond invested in was the Bank of China Green Bond which went towards offshore wind projects, wind power projects, a photovoltaic project, and three projects to electrify metro infrastructure.
The fund tracks environmental data from issuers at the project level rather than at the company level to better target green projects that will deliver greater impact. In 2022 alone, the fund is estimated to have facilitated 182 MW of renewable energy capacity, which Ping An said reduced 60,041 tons of CO2.
Other impacts from the fund include purifying polluted water and electrifying the railway network.
The judging panel said it was this focus on impact that helped it win the award.
Gabriel Yu, director - fixed income portfolio manager, Ping An of China Asset Management (Hong Kong), commented: "There is no time more imminent than now to address our sustainable future. As pointed out in the 2023 IPCC Assessment Report, limiting the magnitude of overshooting 1.5 degrees is critical in ensuring a sustainable and safe future.
"In Asia, we see an abundance of opportunities to facilitate this goal, as regional governments are increasingly environmentally conscious and investors demand greater environmental responsibility. Improving alignment of sustainability investments standards globally also support the growth of green assets; we see Asian green bonds as growing asset class and an attractive diversifier for international investors seeking stable returns with lower volatility compared to the general emerging market bonds."
