AP2, Gothenburg, Sweden, created a stand-alone green bonds portfolio with 1% of total assets, equating to about 3 billion Swedish kronor ($369 million), a spokeswoman said.
The portfolio will be managed in-house. The 300.6 billion Swedish kronor pension fund has a total investment in green bonds of 4.2 billion Swedish kronor, which includes the 1% strategic portfolio. The rest of that allocation is managed in the fund's existing portfolio of global bonds, she said.
“Holdings have been built up successfully over time within our active global bond portfolio, and now we separate part of it and make it a dedicated investment part of the strategic portfolio,” she said in an e-mail.
In a statement on its website, AP2 said the new strategic portfolio is “a further step along the way to making sustainability an integral part of the asset management process.” The allocation is benchmarked against the Barclays/MSCI Green Bond index.
“The percentage of green bonds featured in the active bond portfolio has risen sharply in recent years, and we feel that the market has now achieved a maturity and size to justify a separate investment strategy and their definition as an individual asset class,” said Lars Lindblom, portfolio manager at AP2, in the statement. “We are therefore breaking out our holdings in green bonds from the fixed-income portfolio, to manage them in accordance with a dedicated investment strategy. This strategic move offers the fund clear means of combining solid returns with an allocation of resources to the global sustainability challenge.”
Mr. Lindblom added that the return the pension fund requires on green bonds is in no way different to other investments, but “our preference is a green bond rather than another instrument of similar value.”