FMA approves ESG reorientation of award-winning LLB Anleihen Schwellenländer fund

"We wanted to create a product that has a solid success story to be proud of, while at the same time meeting current requirements for sustainable investment", says Harald Friedrich, Vice Chairman of the Board of Management of LLB Österreich, who is in charge of the bank’s fund business.
A combination of negative knock-out and positive selection criteria was used to ensure ESG conformity for the existing portfolio, which focuses on sovereign bonds and corporate bonds mainly from the government-related sector. "It is a priority for us that emerging market issuers strive to raise their ethical, social and ecological standards over the long term, which will bring them closer and closer to the ESG standards complied with by industrialised countries", explains fund manager Ronald Plasser.

The first stress test, so to speak, went well. Implementing the ESG criteria has not affected the broad diversification of the portfolio, and both yield and risk indicators remain highly attractive even after the classification as light green under Article 8 of the Sustainable Finance Disclosure Regulation.

Award-winning fund strategy

The management strategy of LLB Anleihen Schwellenländer ESG – tried and tested over many years – is a definite USP in comparison with other emerging markets debt products with ESG aspirations, many of which were put on the market only a short while ago. The FONDS professionell industry publication recently awarded it the highest score – Excellent – in the Emerging Markets Fixed-Income Funds category for the German and Austrian fund awards. Ronald Plasser on the fund’s recipe for success: "Even though the fund’s investment focus is on a volatile bond segment, a variety of risk management measures enable it to balance out many emerging markets corrections while at the same time being well able to profit from upward movements in the market."

A high level of flexibility – low entry barriers

Apart from a successful track record, the fund also scores with low entry volumes and transparency with respect to fees. What is more, if offers maximum flexibility: “Due to its being structured as a retail fund, it has a broad investor base. To meet the demands of larger investors, we issued an institutional tranche a few years back. We also offer the existing strategy as a mandate in private-label funds, as well as adjusted in line with individual investor requirements, for instance as a near money market strategy”, explains Harald Friedrich.