Welcome to the Threadneedle (Lux) European Social Bond Social Impact Report 2021/2022. After an extraordinary 2020/2021 financial year in many respects (COVID crisis having led to a record number of Social Bond issues, with a growth of more than 100% over one year in the Fund’s AUM), this 2021/2022 financial year marks the return to a not as exceptional, but nonetheless difficult context in terms of bond valuations. We will recall a few of this year’s highlights below:
The Fund’s AUM, fell from €370m in June 2021 to €365m a year later. Investors’ interest in this fund, has not waned, however, as this 1.4% drop came in a difficult context for bond investments – the Fund’s benchmark market index funds fell by 12% over the same period.
The management team made significant efforts, to ensure that the Fund adapted its practices to the new Belgian SRI Label “Toward Sustainability” requirements, a true European benchmark in this area, in a context of raising requirement levels for this Label.
The share of Social Impact Investments (rated A1 to A4) in the Fund continued to grow and stood at 33.7% as of June 30, 2022, even though the minimum target was 25% for this indicator. This sustained performance above the target indicator led the Fund’s Social Advisory Board to raise the minimum target for the share of Social Impact Investments to 30% at its September 2022 meeting.
Finally, Simon Bond, the Fund’s manager since its creation and a talented and tireless promoter of the development of Social Bond issues, announced his gradual withdrawal from the Fund’s management, with a transition period of one year from March 2022 to March 2023 with the new manager, Tammie Tang. I join all the members of the Social Advisory Board in warmly thanking Simon for all the work carried out since 2017. Thank you to Tammie for her very effective takeover, in a market context that was turbulent to say the least! We wish Simon an excellent retirement.
“It has been an honour to manage the Threadneedle European Social Bond since its launch in May 2017. I am proud of the achievement of the fund over the last 5 years and our influence in the growth of the market. But now is the time to hand over the baton as I gradually work towards retirement next year. I am confident that the legacy I leave is secure and I wish the team well in continuing to advocate and support positive impact on society through the use of proceeds of the bonds that are bought by the fund.”
Simon Bond, Executive Director: Responsible Investment Portfolio Management
“I am also honoured to continue the great work started by Simon and the team. In a short amount of time, we’ve seen how well the bond market can deliver positive social outcomes. The prospect ahead for the market and our strategy is exciting and we’ll continue our advocacy and social bond investments to benefit our communities and people.”
Tammie Tang, Portfolio Manager