28 July 2017
My fifth choice is a Green Bond. It tracks an index created by a small but successful supplier. Solactive I have come to trust for its excellent Robotics and Cyber Security indices: I admire the team’s vision, and the composition of its indices to reflect important modern themes.
The Green Bond index is a benchmark of investment grade loans to sovereign nations, supranational organisations, development banks and companies. The loans are for financing green projects; especially those to mitigate climate change, or adapt to it. Solactive’s method of filtering loans for the index accords with principles set by the Climate Bonds Initiative; an independent, not-for-profit organisation, dedicated to promote investment for a low-carbon and climate-resilient economy.
The bond is only five months old, so it mayn't announce its performance data for another seven months. At £9m it’s small as yet, and that too might understandably deter some investors. What I can tell you is:
• It’s available for ISAs and SIPP,
• Income is reinvested. The yield is presently expected to be 1.4%. It might sound not much, but I think some growth will develop too. More important (in my opinion) is that the theme is one of relative financial safety; just the place for skimmed profits in times of market exuberance.
• The annual charge is a modest quarter of one percent, 0.25%,
• The largest six borrowers are (in order of amount) in France, Supranational, Netherlands, Germany, USA and China
• 81% of the loans are to organisations rated between A-AAA.
• The loans are for periods between 1-25 years. 80% are in the 1-10 year zone.
• There are presently 210 different loans in the index, and the largest is 1.68% of the index; to European Development Bank.
• Here is the link to Lyxor’s factsheet.
21 July 2017
To me all markets look expensive, so I’m reluctant to invest new capital, and I’m reluctant to move into cash just yet. What I would like very much is to cream-off some profits I’ve made, and invest them somewhere defensive. Where is that?
Among the 42 indices I monitor almost daily, I see five valid options. Four I have long promoted:
Cyber Security ISPY
Robotics & Automation ROBG
Ageing Population AGED