Ping An of China Asset Management (Hong Kong)'s China Green Bond Fund has been named as the 2024 ESG fixed income fund of the year – Asia by Sustainable Investment Awards judges, who noted its strong returns in a challenging year for green bond funds.

The fund – which is aligned with the Paris Agreement's targets – made a total return of 5.5% last year*, despite a relatively defensive duration of 2.8 years at end-2023. Over the past year, the fund has diversified its portfolio holdings by increasing exposure to higher-quality regions in North Asia, such as South Korea and Japan. Meanwhile, the overall portfolio yield was increased to take advantage of higher front-end yields and to mitigate rate policy end-cycle volatility.

The fund's managers have made efforts to reference changes in the EU taxonomy to align closer with major international standards, in addition to using the Climate Bonds Initiative taxonomy as its main guidepost. As such, the fund reduced exposure to natural gas-related bonds where it was difficult to ascertain compliance with the EU taxonomy.

Judges noted the fund's ongoing commitment to data collection and aggregation at a project and company level, including key metrics such as carbon emissions reduced and renewable energy capacity and generation.

Ping An uses this data to measure the fund's green impact on a year-on-year basis. Its most recent report found that it has been more focused on renewable energy generation over the past year, and the portfolio is reported to have contributed to total power generation of 91,640MWh in the year. It has also reduced its carbon footprint through efficiency improvement projects, funded or supported the construction of over 1,500km of new railways and 77 green building projects.

Gabriel Yu, director – fixed income portfolio manager at Ping An of China Asset Management, said: "Every year when we review our fund performance and impact, we look at how the world has changed and the context in which we have performed. We continue to see promising developments in the regulatory landscape and government policies in forwarding green initiatives. At the same time, there are increasing cases of extreme weather globally that has affected everyday lives.

"It is imperative we address climate change head on. Once again, we are honoured with the recognition of our consistent approach towards green investing, and graciously accept this award, not just as a testimony of our commitment, but also as a reminder that there is more work to be done."

*Based on Class S (USD) (UH) (R).