TargetNetZero Global Convertible Bond
Investing in companies with a clear strategy of decarbonisation.
Convertible bonds offer investors the opportunity to participate in the performance of equity markets while limiting the downside due to the bond characteristics of the asset class. This asymmetrical quality can provide diversification for traditional portfolios. As the global economy engages in climate transition, we are delighted to present an innovative global convertible bond strategy with a defined target of net zero by 2050, as set out in the Paris Agreement.
Source: LOIM. Past performance is not a guarantee of future results. There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred
A concentrated high conviction portfolio designed to be a sustainable solution for convertible bond investors
|
|
|
| Convertible bonds are corporate bonds which offer investors the option to convert into share | They allow investors to participate in the potential upside of equities while limiting the downside in falling markets1 |
|
|
|
| Article 9 classification Targeting 50% emissions reductions by 2030 and 100% by 2050 | Proprietary, science-based methodology developed in partnership with Oxford University |
why invest?
A climate transition-focussed opportunity offering the potential to participate in rising equity markets, cushioned by a ‘bond floor’ in falling markets.
The sustainable power of both worlds
We aim to exploit the full potential of this hybrid asset class.
We search the global investment universe for attractive opportunities, seeking to gain exposure to the best the asset class has to offer. We select companies with a clear strategy of decarbonisation (targeting net zero by 2050), investing in our highest conviction names in global convertible bonds through a concentrated portfolio.
Our objective is to generate potential outperformance through a more flexible approach to risk.
Best of both worlds and climate focussed
We select companies with the most compelling trajectory towards net-zero alignment by 2050 to give diversified exposure via a portfolio of value names and high-growth disruptors. Convertible bonds derive their performance from multiple sources:
1. Exposure to potential equity market upside. The extent to which the price of the convertible bond is expected to change for a given change in stock price is known as the delta. The risk budget of the portfolio is flexible, allowing us to align equity exposure to our top-down and bottom-up market view.
2. Capital protection on the downside from bond characteristics. We select issues with strong fixed income attributes to maximise the value of the bond element.
A long-standing franchise at Lombard Odier Investment Managers
| A market leader | Established team | High Conviction |
|
|  |  |
| LOIM has been investing in convertible bonds since 1987, building up over three decades of convertible bond experience across market cycles. | The 11-member investment team conducts extensive analysis, leveraging the research and risk management capabilities of LOIM’s global platforms, including key insights from our 35+ Sustainability and Climate Science Experts. | A search for the highest potential investments across different regions, sectors and styles, targetting those with a clear CO2 reduction strategy for the portfolio. |
Incorporating LOIM’s decarbonisation expertise in a well established process
TargetNetZero Global Convertible Bond investment process
Global convertible bond universe (800 issues) |
| Target net zero analysis (400 issues) |
| Exclude | Lower | Reduce | |
| Prefer Ice cubes | Avoid burning logs | ||
| Fundamental analysis • Top-down market drivers • Sector and sub-sector views • Equity and credit analysis • Evaluate equity upside potential • Assess credit spread tightening • Actively favour high ESG scores and avoid low scores • Sustainability of business model • Management quality | Technical factors • Convertible bond characteristics • Profile - implied volatility, delta, gamma, rho • Rich/cheapness • Liquidity/market dynamics • Fixed income characteristics – rating, subordination, duration • Prospectus terms - ratchets, calls, puts |
| Portfolio construction Average delta, overall credit rating, portfolio temperature, sector weighting, individual position size |
| Target Net Zero Global Convertible Bond Portfolio (Approximately 50 issues) |
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 Coal power, coal mining, unconventional oil and gas. There can be no assurance that investment objectives will be achieved or that there will be a return on capital
investment team.
 | Natalia Bucci |
 | Arnaud Gernath Co Portfolio Manager |
Source: LOIM, November 2021.
important information.
This marketing document is issued by Lombard Odier Funds (Europe) S.A. a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 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 the offering of portfolio management and investment advisory services.
Lombard Odier Investment Managers (“LOIM”) is a trade name.
The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as a UCITS within the meaning of EU Directive 2009/65/EC, as amended. The management company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company (Société Anonyme SA), having its registered office at 291, route d’Arlon, L-1150 Luxembourg, authorized and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended. The Fund is only registered for public offering in certain jurisdictions. The articles of association, the prospectus, the Key Investor Information Document, the subscription form and the most recent annual and semi-annual reports are the only official offering documents of the Fund’s shares (the “Offering Documents”). They are available on http//www.loim.com or can be requested free of charge at the registered office of the Fund or of the Management Company, from the distributors of the Fund or from the local representatives as mentioned below.
This document is provided for informational purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This document does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipients exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. The contents of this document are intended for persons who are sophisticated investment professionals and who are either authorised or regulated to operate in the financial markets or persons who have been vetted by LOIM as having the expertise, experience and knowledge of the investment matters set out in this document and in respect of whom LOIM has received an assurance that they are capable of making their own investment decisions and understanding the risks involved in making investments of the type included in this document or other persons that LOIM has expressly confirmed as being appropriate recipients of this document. If you are not a person falling within the above categories you are kindly asked to either return this document to LOIM or to destroy it and are expressly warned that you must not rely upon its contents or have regard to any of the matters set out in this document in relation to investment matters and must not transmit this document to any other person. This document contains the opinions of LOIM, as at the date of issue. The information and analysis contained herein are based on sources believed to be reliable. However, LOIM does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices indicated may change without notice. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.
Source of the figures: Unless otherwise stated, figures are prepared by LOIM.
Singapore: This marketing communication has been approved for use by Lombard Odier (Singapore) Ltd for the general information of accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the Securities and Futures Act (Chapter 289). Recipients in Singapore should contact Lombard Odier (Singapore) Ltd, an exempt financial adviser under the Financial Advisers Act (Chapter 110) and a merchant bank regulated and supervised by the Monetary Authority of Singapore, in respect of any matters arising from, or in connection with this marketing communication. The recipients of this marketing communication represent and warrant that they are accredited investors and other persons as defined in the Securities and Futures Act (Chapter 289). This advertisement has not been reviewed by the Monetary Authority of Singapore.
Hong Kong: This marketing communication has been approved for use by Lombard Odier (Hong Kong) Limited, a licensed entity regulated and supervised by the Securities and Futures Commission in Hong Kong for the general information of professional investors and other persons in accordance with the Securities and Futures Ordinance (Chapter 571) of the laws of Hong Kong.
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 fund. The performance of a benchmark shall not be indicative of past or future performance of any fund. It should not be assumed that the relevant 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 fund’s returns and any index returns.
While the results presented are based on certain assumptions that are believed to reflect actual circumstances, these assumptions may not include all of the variables that may affect, or have affected in the past, the ratings calculations.
The following factors are taken into account in the calculation of the ratings:
1. The ESG team uses data issued from a recognised third party provider to establish the severity level of corporate controversies
2. LOIM has developed its own business rating methodology that integrates data from multiple sources. The scores thus obtained are updated on a weekly basis and represent an assessment of the Environmental, Social and Governance quality of a company. These grades were designed by LOIM's ESG experts and take into account the most relevant extra-financial dimensions applicable to each company’s activity.
If the funds are denominated in a currency other than that in which the majority of the investor’s assets are held, the investor should be aware that changes in rates of exchange may affect the value of the funds’ underlying assets. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.
The Fund's investments in Fixed Income securities are subject to the risks associated with debt securities including economic conditions, government regulations, market sentiment, and local and international political events. In addition, the market value of fixed income securities will fluctuate in response to changes in interest rates, currency values, and the creditworthiness of the issuer. If an issuer’s financial condition worsens, the credit quality of the issuer may deteriorate making it difficult for an investor to sell such investments.
LOIM does not provide accounting, tax or legal advice.
Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.
Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.
No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Funds (Europe) S.A. prior consent. In Luxembourg, this material is a marketing material and has been approved by Lombard Odier Funds (Europe) S.A. which is authorized and regulated by the CSSF.
©2021 Lombard Odier IM. All rights reserved
