Triodos Sustainable Bond Fund

During the first half of 2017, the sub-fund reduced its positions in German, French, Dutch and Belgian sovereign bonds in favour of Spanish and Italian sovereign bonds, and it was the first year in which the sub-fund established a position in the latter two countries. Spain and Italy have become eligible for investment since February and June of 2017 respectively. The positions in sub-sovereign bonds were optimised by replacing a number of holdings with other maturities. The sub-fund also participated in the new corporate bond issues by ABN AMRO and Deutsche Telekom. The positions in ASML, Priceline.com, Terna and Vodafone were reduced because of their high valuation levels. The holdings in Rentokil Initial, BBVA and LafargeHolcim were sold because these companies no longer meet the Triodos sustainability criteria. Finally, the sub-fund added to its existing positions in ING Bank, ABN AMRO, Danske Bank and Deutsche Börse because of their attractive risk premiums. This has increased the weight of financial institutions within the portfolio.

During the second half of the year, the sub-fund reduced its sovereign bond holdings. The position in French sovereign bonds was reduced in order to allow for an expansion of the holdings in sovereign bonds from Italy and Germany. The positions in Germany mainly comprise inflation-linked bonds. The position in sub-sovereign bonds was further reduced for valuation reasons. The sub-fund expanded its existing positions in Renault, ING and Heineken. Finally, the sub-fund established new positions in KPN, Telenor, Proximus and Vodafone.

In summary, the weight of sovereign and sub-sovereign bonds was reduced relative to the start of the year, while the weight of corporate bonds has increased. The duration of the sub-fund rose slightly (6.25) relative to the start of the year (6.17).

Breakdown by risk category as at December 31, 2017 (as a % of portfolio)

Triodos Sustainable Bond Fund – Breakdown by risk category (pie chart)

Breakdown by duration as at December 31, 2017 (as a % of portfolio)

Triodos Sustainable Bond Fund – Breakdown by duration (pie chart)

Top 5 sub-sovereign and corporate bond holdings as at December 31, 2017

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Name

% of net assets

 

 

 

2.500%

ING Bank 2017 - 2029

2.6

1.125%

Kreditanstalt für Wiederaufbau 2013 - 2018

2.2

2.375%

Compagnie de Financement Foncier 2012 - 2022

2.0

2.625%

European Investment Bank 2010 - 2018

1.9

2.875%

ABN AMRO 2016 - 2028

1.9

 

 

 

Top 5 sovereign bond holdings as at December 31, 2017

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Name

% of net assets

 

 

 

2.750%

French Government bond 2012 - 2027

2.6

4.800%

Spanish Government bond 2008 - 2024

2.2

3.000%

German Government bond 2010 - 2020

2.1

0.500%

German Government bond 2015 - 2025

2.0

4.250%

Belgium Government bond 2010 - 2020

1.8

 

 

 

Performance

Based on net asset value, Triodos Sustainable Bond Fund generated a return of -0.3% (Z-dis) in 2017. During the same period the benchmark rose 0.8%. The sub-fund’s total net assets fell from EUR 372.9 million to EUR 274.4 million.

The overweight positions in Austria and Germany, especially in German inflation-linked bonds, had a positive impact on the sub-fund’s performance.

The substantially underweight position in France during the first quarter, around the time of the French elections, depressed the sub-fund’s return. The overweight position in Belgium and the underweight position in Italy also had a negative impact on the sub-fund’s return. The risk premiums for Italian bonds fell during the year. The overweight position in sub-sovereign bonds also had an adverse effect on relative performance.

In the investment universe, sub-sovereign bonds are overweighted relative to the benchmark. The small overweight position in corporate bonds during the first half of the year held back the sub-fund’s performance. In the second half of the year, however, the sub-fund recovered part of its loss by increasing its overweight position in corporate bonds. Corporate bonds outperformed sovereign as well as sub-sovereign bonds. Sub-sovereign bonds were the weakest performers, followed by sovereign bonds.

Performance based on net asset value as at December 31, 2017
(including reinvestment of dividends, including costs)

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Morningstar
rating

1 year

3 year p.a.

5 year p.a.

10 year p.a.

Since inception p.a.1

1

The inception dates can differ between share classes.

2

The Z-share class and the I-share class have a limited history. Returns prior to the launch of these share classes are based on the returns of the comparable R-share class.

3

These are the historical figures of the former Triodos Meerwaardefonds NV, which merged into Triodos SICAV I on June 28, 2010.

4

Excluding costs.

 

n/a: not applicable

 

 

 

 

 

 

 

 

Triodos Sustainable Bond Fund I-Cap

★ ★ ★

-0.1%

0.6%

2.1%

3.8%

3.6%

Triodos Sustainable Bond Fund I-Dis

★ ★ ★

-0.1%

0.7%

2.1%

3.5%2

4.0%2

Triodos Sustainable Bond Fund R-Cap

★ ★ ★

-0.7%

0.2%

1.6%

3.4%

3.3%

Triodos Sustainable Bond Fund R-Dis

★ ★ ★

-0.7%

0.2%

1.6%

3.3%3

3.9%3

Triodos Sustainable Bond Fund Z-Cap

★ ★ ★

-0.3%

0.6%

1.9%2

3.6%

3.5%2

Triodos Sustainable Bond Fund Z-Dis

★ ★ ★

-0.3%

0.6%

1.9%2

3.5%2

4.0%2

Benchmark: iBoxx Euro Non-Sovereigns Index (60%),
iBoxx Euro Sovereigns Index (40%)4

n/a

0.8%

1.6%

3.4%

4.7%

4.8%

 

 

 

 

 

 

 

 

Evolution of returns Triodos Sustainable Bond Fund

Evolution of returns Triodos Sustainable Bond Fund (line chart)

* Since 2010 the sub-fund also invests in sovereign bonds in order to improve the bond portfolio’s diversification and liquidity.

** Figures given for the R-share classes are the historical returns of Triodos Meerwaardefonds NV, which merged into Triodos SICAV I on June 28, 2010.

*** Triodos Sustainable Bond Fund aims to achieve returns that are in line with the market. The sub-fund compares its return and the sustainability scores (environment, social and governance) of the companies in which it invests with the iBoxx Euro Non-Sovereigns Index (60%) and the iBoxx Euro Sovereigns Index (40%). These are generally accepted indices for (non-sustainable) worldwide diversified bond funds. The investment policy that is pursued by Triodos Sustainable Bond Fund is not aimed at replicating or outperforming the benchmark. The sub-fund may deviate from the benchmark because it only invests in companies that meet its strict sustainability criteria. The fund believes that in the longer term sustainable investments offer more stable and higher returns than non-sustainable investments. The fund therefore tends to invest in companies on the basis of a long-term investment horizon.

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