Green bonds

UBS introduces first pure green investment portfolio in Asia

The Swiss private bank launches a portfolio that only invests in stocks or bonds with a good sustainability track record

PUBLISHED : Monday, 09 April, 2018, 7:02am
UPDATED : Monday, 09 April, 2018, 1:39pm

UBS, the Swiss private banking giant, is launching a portfolio that invests purely in green stocks and bonds in Asia on Monday (April 9) in a bid to meet demand from wealthy, environmentally-conscious clients.

It follows UBS’ launch of a similar portfolio in Europe earlier this year, which is proving popular with a new generation of green-savvy investors who want to back companies that make a good environmental and social impact, while at the same time generating good returns.

The bank already manages green-concept funds but they focus on both traditional and green investments. UBS claims this is the first time a private bank has allowed investors to put their money in a portfolio 100 per cent allocated to environmental and socially-friendly stocks and bonds.

“The key is to create an investment portfolio which is not only driven by financial returns but also by social and environmental returns,” said Mario Knoepfel, head of sustainable and impact investing, Asia-Pacific, UBS Wealth Management.

Studies show that 92 per cent of investment portfolios with a sustainable investment concept have the same or better returns than a normal investment portfolio. Only 8 per cent of them have underperformed, according to James Gifford, UBS’ chief investment officer, wealth management.

“The companies which pay attention to social responsibilities and environmental impact are usually the ones with better management. Companies with better management usually can outperform the others,” Gifford said.

Clients who want to invest in such a portfolio need to put in at least US$500,000, said Mischa Eckart, head of client investment specialists, Asia-Pacific, of UBS Wealth Management.

Eckart said besides companies that already have a good track record in social responsibility or environment protection policies, they would also invest in some potential companies which had not yet reached the highest standards but which were heading in the right direction.

UBS hopes this will motivate these companies to do better in these areas so as to improve their social and environmental impact, Eckart said.

Gifford said the purely sustainable portfolio would adopt a diversified approach, putting 54 per cent in stocks, 41 per cent in bonds and 5 per cent in cash or other liquid assets.

Among the equities, it would include a combination of leading stocks that already have outstanding environmental policies and companies which are willing to work with the fund managers to improve their social and environmental policies.

For the fixed-asset investments, Gifford said they would invest in green bonds issued for the purpose of financing environmental projects or World Bank bonds which fit the criteria.