TargetNetZero IG fixed income: rethink net zero

TargetNetZero Global & Europe Investment Grade Corporate

Accelerate decarbonisation with our fixed income portfolios.

At Lombard Odier, we have developed pioneering strategies to form a fixed income universe ready for the fight against global warming.

Our TargetNetZero fixed income funds have a wide range of climate objectives covering the risk of transition, the opportunities and the physical risks associated with climate change.

Portfolios include both issuers already targeting net zero CO2 emissions by 2050, as well as those without such targets but who may be brought into line through regulatory action, investor engagement and market changes.

TargetNetZero: Decarbonise, diversify, and drive the transition through our net-zero transition process

	Baseline footprint Assess the level of carbon emissions and level of carbon risk in portfolios today across both direct and indirect emissions.
	2. Current emissions trajectory Assess not only the current emissions of a company or portfolio, but also their expected trajectory and the necessary level of decarbonisation the company must achieve.
	3. Potential for acceleration Consider the evolution of internal, industry and regulatory pressure that may lead a company to accelerate its climate commitments.
	4. Leverage new information From new company and government commitments to new carbon data received, we continually re-assess our views of the trends across the wider economy and the investable universe to implement appropriate portfolio adjustments.

Source: LOIM. For illustrative purposes only.

Why invest?

Aligning to the climate transition, the decarbonisation imperative is yet to be fully reflected in credit markets.

Carbon footprints alone do not tell us the full picture of climate risks in a portfolio. We believe that maintaining a diversified portfolio that identifies companies on a strong decarbonisation path, irrespective of sector, will help accelerate the transition to net zero and provide compelling returns for investors.
~ Hubert Keller, Senior Managing Partner of Lombard Odier

Inescapable Net Zero Momentum:

The transition to net zero will influence the behaviour of issuers and investors.
Some sectors will find the transition to Net Zero easier than others. TargetNetZero is already positioned with companies committed to meet the Paris Agreement and thus has a reduced transition risk.
High emission companies with a clear decarbonisation strategy may offer return opportunities missed by low-carbon strategies.

Access to potential higher yielding opportunities:

The sustainability lens provides greater confidence in the assessment of issuers to separate the winners from the losers and invest in potential higher-yielding issues to enhance returns.
Issuers with high emissions but no clear decarbonisation strategy may find their business model compromised with increased credit risk.
Our TargetNetZero fixed income funds aim to deliver a higher potential return than the benchmark² with lower emissions across all scopes, while decarbonising at a faster rate.

Compared to our peers, at Lombard Odier Investment Managers, we aim to deliver on three parameters:

Redeployment of capital	Rising awareness	Market forces

Reducing the transition risk for investors. Thus aiming to generate better risk-adjusted returns as our global economy shifts from WILD to CLIC³.	Offering an investment opportunity in line with the climate goal to limit greenhouses gases and consumer demand.	New targets and regulations are increasingly focused on circularity, nature, equality and net-zero. Technological innovation and economies of scale are driving down the costs CLIC^TMsolutions⁴.

¹ Source: For illustrative purposes only. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk. ² Bloomberg Barclays Global Aggregate Corporates for the sub-fund TargetNetZero Global IG & Bloomberg Barclays Euro Aggregate Corporates for the sub-fund TargetNetZero Euro IG respectively. No benchmark/index is directly comparable to the investment objectives, strategy or universe of a fund. ³ ‘WILD’: Wasteful, Idle, Lopsided, Dirty. CLICTM: Circular, Lean, Inclusive, Clean economic model.
⁴ UNPRI report as at September 2019. There can be no assurance that the investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred.

Investment philosophy and process.

At Lombard Odier Investment Managers, we understand the transitions unfolding across our society and economy.

Our investment philosophy:
Utilising our fundamental credit expertise to identify value in decarbonising companies.

TNZ FI RTI table-01.svg Source: LOIM analysis. For illustrative purpose only. Sustainable Investment Research Strategy & Stewardship (SIRSS) and Environment, Social and Governance (ESG) are LOIM’s transversal sustainability teams. ¹ “Ice cubes” that are significantly reducing global warming. ² “Burning logs” that are significantly increasing global warming. There can be no assurance that investment objectives will be achieved or that there will be a return on capital.

The investment team

	Yannik Zufferey Head of Fixed Income
	Ashton Parker Head of Fundamental Fixed Income Credit Research and Senior Portfolio Manager
	Jérôme Collet Head of Beta Portfolio Manager
	Erika Wrangeård Portfolio Manager Sustainability Specialist

Sustainable Investment Research, Strategy & Stewardship team (SIRSS)

	Maxime Perrin Head of Sustainable Investment
	Dr Thomas Hohne-Sparborth, PhD Head of Sustainability Research
	+17 sustainability experts and sector analyst.

Source: LOIM. For illustrative purposes only.

Sub-Fund Information.

• LO Funds - TargetNetZero Global IG Corporate
• LO Funds - TargetNetZero Euro IG Corporate

Important information.

Lombard Odier Funds (hereinafter the “Fund”) is a Luxembourg investment company with variable capital (SICAV). The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as an Undertaking for Collective Investments in Transferable Securities UCITS under Part I of the Luxembourg law of the 17 December 2010 implementing the European directive 2009/65/EC, as amended (“UCITS Directive”). This marketing document relates to “TargetNetZero Europe Equity and TargetNetZero Global Equity,” Sub-Funds of Lombard Odier Funds (hereinafter the “Sub-Fund”). The Management Company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxem-bourg, Grand Duchy of Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds (“AIFs”) and other regulated funds, collective investment vehicles or other investment vehicles, as well as theoering of portfolio management and investment advisory services. This marketing communication was prepared by Lombard Odier Asset Management (Europe) Limited. The prospectus, the articles of incorporation, the Key Investor Information Documents, the subscription form and the most recent annual and semi-annual reports are the only official offering documents of the Sub-Fund’s shares (the “Offering Documents”). The Offering Documents are available in English, French, German and Italian at www.loim.com and can be requested free of charge at the registered office of the Sub-Fund in Luxembourg: 291 route d’Arlon, 1150 Luxembourg, Grand Duchy of Luxembourg. The information contained in this marketing communication does not take into account any individual’s specific circumstances, objectives or needs and does not constitute research or that any investment strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal investment advice to any investor. This marketing communication is not intended to substitute any professional advice on investment in financial products. Before making an investment in the Sub-Fund, an investor should read the entire Offering Documents, and in particular the risk factors, costs and conditions pertaining to an investment in the Sub-Fund. We would like to draw the investor’s attention toward the long- term nature of delivering returns across the economic cycle and the use of financial derivative instruments as part of the investment strategy may result in a higher level of leverage and increase the overall risk exposure of the Sub-Fund and the volatility of its Net Asset Value. Investors should take care to assess the suitability of such investment to his/her particular risk profile and circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital. Past performance is not a reliable indicator of future results. Where the Sub-Fund is denominated in a currency other than an investor’s base currency, changes in the rate of exchange may have an adverse effect on price and income. Please take note of the risk factors. Any benchmarks/ indices cited herein are provided for information purposes only. No benchmark/ index is directly comparable to the investment objectives, strategy or universe of a Sub-Fund. The performance of a benchmark shall not be indicative of past or future performance of any Sub-Fund. It should not be assumed that the relevant Sub-Fund will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between such Sub-Fund’s returns and any index returns. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/ risk. MSCI information may only be used for internal purposes, may not be reproduced or disseminated in any form whatsoever and may not be used as the basis or constituent element of any financial instruments, products or indices. MSCI information should not be construed as investment advice or recommendations to you to make (or refrain from making) any investment decision and cannot, as such, be considered reliable. Historical data and analyses should not be considered as any indication or guarantee in any analysis, forecast or prediction of future performance. MSCIinformationisprovided“asis” andtheuserofthisinformation assumes full responsibility for the use that is made of this information. MSCI, each ofitsaffiliatesandothersinvolvedinorconcernedwiththecompilation, calculation or creation of MSCI information (collectively the “MSCI Parties”) expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, market value and fitness for a specific purpose) with respect to such information. Without limiting the foregoing, in no event shall the MSCI Parties be liable for any direct, indirect, specific, incidental, punitive, consequential (including, without limitation, lost profits) or other damages. (www.msci.com). The information and analysis contained herein are based on sources considered to bereliable. Lombard Odiermakesitsbesteffortstoensurethetimeliness, accuracy, and completeness of the information contained in this marketing communication. Nevertheless, all information and opinions as well as the prices, market valuations and calculations indicated here in may change without notice. Source of the figures: Unless otherwise stated, figures are prepared by Lombard Odier Asset Management (Europe) Limited. The tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Lombard Odier does not provide tax advice and it is up to each investor to consult with its own tax advisors. NOTICE TO RESIDENTS IN THE FOLLOWING COUNTRIES: Austria – Paying agent: Erste Bank der österreichischen Sparkassen AG. Belgium – Financial services provider: CACEIS Belgium S.A. The Sub-Fund is not appropriate for Belgian retail investors unless the investment subscription is more than EUR 250,000. Please contact your tax advisor to identify the iBelgian tax “TOB” (“Taxe sur les Operations Boursières”) on your transactions, as well as the impacts of the withholding tax (“Précomptes mobiliers”). Lombard Odier has an internal Complaints Management Service. You can lodge a claim via your Relationship Manager or directly to Lombard Odier (Europe) S.A. Luxembourg, Belgium Branch, Claim Management Service, Avenue Louise 81, Box 12, 1050 Brussels, Fax: (+32) 2 543 08. Alternatively you can address your complaint free of charge to the national complaint service in Belgium, OMBUDSMAN: North Gate II, Boulevard du Roi Albert II, n°8 Boîte 2 2, 1000 Brussels, Tel: (+32) 2 545 77 70, Fax : (+32) 2 545 77 79, Email: Ombudsman@Ombusfin.be. France – Centralising agent: CACEIS Bank. Germany – German Information and Paying agent: DekaBank Deutsche Girozentrale. Italy – Paying agents: Société Générale Securities Services S.p.A., State Street Bank International GmbH – Succursale Italia, Banca Sella Holding S.p.A., Allfunds Bank S.A.U., Milan Branch, BNP Paribas Securities Services, CACEIS Bank, Italy Branch. Liechtenstein – Paying agent: LGT Bank AG. Luxembourg – Depositary, central administration agent, registrar, transfer Agent, paying agent and listing agent: CACEIS Bank, Luxembourg Branch. Netherlands – Paying agent: Lombard Odier Funds (Europe) S.A. – Dutch Branch. Spain – Paying agent: Allfunds Bank S.A.U. – CNMV Number: 498. Sweden – Paying agent: Skandinaviska Enskilda Banken AB (publ). Switzerland – The Sub-Fund is registered with the Swiss Federal Financial Market Supervisory Authority (FINMA). The Offering Documents together with the other Shareholders’ information are available free of charge at the Swiss Representative: Lombard Odier Asset Management (Switzerland) S.A., 6, avenue des Morgines, 1213 PetitLancy, Switzerland. Swiss Paying Agent: Banque Lombard Odier & Co Ltd. 11, rue de la Corraterie 1204 Genève, Switzerland. Publications about the Sub-Fund: www. fundinfo.com. The issue and redemption prices and / or the net asset value (with the mention “excluding commissions”) of the Share classes distributed in Switzerland: www.swissfunddata.ch and www.fundinfo.com. Bank Lombard Odier & Co Ltd is a bank and securities dealer authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA). United Kingdom – This document is a financial promotion and has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000, by Lombard Odier Asset Management (Europe) Limited. It is approved for distribution by Lombard Odier (Europe) S.A., London Branch for Retail Clients in the United Kingdom. The Sub- Fund is a Recognised scheme in the United Kingdom under the Financial Services and Markets Act 2000. UK regulation for the protection of retail clients in the UK and the compensation available under the UK Financial Services Compensation scheme does not apply in respect of any investment or services provided by an overseas person. UK facilities agent: Lombard Odier Asset Management (Europe) Limited. Lombard Odier (Europe) S.A. UK Branch is a credit institution regulated in the UK by the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Details of the extent of our authorisation and regulation by the PRA and regulation by the FCA are available from us on request. European Union Members: This marketing communication has been approved for issue by Lombard Odier (Europe) S.A. The entity is a credit institution authorised and regulated by the Commissionde Surveillancedu Secteur Financier (CSSF) in Luxembourg. Lombard Odier (Europe) S.A. branches are operating in thefollowing territories: Belgium: Supervisory Authority: Autoritédes services et marches financiers (FSMA), Representative: CACEIS Belgium S.A.,Avenue du Port 86C, b320, 1000 Brussels; France: Lombard Odier (Europe). S.A. Succursale en France, a credit institution under limited supervision in France by the Autorité de contrôle prudentiel et de résolution (ACPR) and by the Autorité des marchés financi-ers(AMF) in respect of its investment services activities; Italy: Lombard Odier(Europe) S.A. Succursalein Italia, enrolledinthe Milan Companies Register No. 09514880963, R.E.A. No. MI – 2095300 Regulated in Italy by the Commissione Nazionale per la Società e la Borsa (CONSOB) and la Banca d’Italia; Spain: Lom-bard Odier (Europe) S.A. Sucursal en España, Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., credit institutions under limited supervision in Spain by the Banco de España and the Comisión Nacional del Mercado de Valores (CNMV). United States: The Fund and Sub-Fund is not registered under the “Securities Act of 1933” as amended and therefore, cannot be sold, offered or distributed to any “U.S, Person” as defined under “Regulation S”. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States or given to any US person. This marketing communication may not be reproduced (in whole or in part), transmitted, modified, or used for any public or commercial purpose without the prior written permission of Lombard Odier.

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TargetNetZero Global & Europe Investment Grade Corporate

TargetNetZero: Decarbonise, diversify, and drive the transition through our net-zero transition process

Why invest?

Investment philosophy and process.

Important information.

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