Investing sustainably in bonds and equities on a global basis

The world in which we live has changed tremendously in the nearly ten years since the fund launched. This applies to the geopolitical world order, which was turned upside down at the latest when Russia invaded Ukraine. At the same time, however, it applies to the now omnipresent political and social challenges caused by climate change: More or less the entire world is affected by droughts, flooding, storms, and forest fires, and these problems have significantly increased people’s awareness of the need to follow a responsible and climate-friendly lifestyle. This has also been evident in investment for several years now, as more and more investors want to invest their capital in a sustainable and responsible way.

Austria’s biggest retail fund

As an “early mover” with a stringent sustainable investment process and a product range that has become very extensive, today Raiffeisen Capital Management enjoys a high level of credibility when it comes to ESG investments – not just in Austria, but also among investors in Italy, Germany, and CEE.

Raiffeisen-Nachhaltigkeit-Mix is Raiffeisen Capital Management’s flagship fund. With a fund volume of roughly EUR 5 billion (as of the end of October 2023), it is not only the largest sustainability fund managed by an Austrian fund company, but also Austria’s biggest retail fund overall. And it is also among the top funds in its peer group at the European level.

Highly decorated with the three-star seal from FNG and the Austrian Ecolabel

Raiffeisen-Nachhaltigkeit-Mix is also highly decorated, proudly bearing numerous respected sustainability labels including the three-star FNG seal and the Austrian Ecolabel, and is regularly honoured for its high management quality internationally (e.g. in Italy) as well. The massive inflows in recent years have come from both institutional investors and retail investors – a clear sign that sustainability is now an important factor when it comes to investing.

Balanced asset selection in equities and bonds

As a mixed fund, Raiffeisen-Nachhaltigkeit-Mix invests in both equities and bonds with a more or less balanced asset allocation, making it a universal investment. The equities allocation is roughly 50% and is broadly diversified on a global basis with a focus on developed markets. The investments are not limited to environmental and climate issues, but include all ESG criteria, even factors such as employee motivation, the ability to implement good ideas, corporate governance, good customer relations, and product safety. Issues that should be a matter of course, but (still) are not. Thus, the fund’s scope of investment covers particularly responsible companies with a solid financial footing and good earnings development. At the same time, certain areas are precluded, such as the defence industry and green/plant-based genetic engineering, as well as companies that violate labour and human rights.

How are equities selected?

The fund management at Raiffeisen KAG follows its own comprehensive sustainability approach, which includes exclusion and negative criteria as well as positive criteria. The approach incorporates an extensive stakeholder evaluation, defines key performance factors, contains an analysis based on the UN’s Sustainable Development Goals, and also employs our own Raiffeisen ESG indicator*. It also includes regular communication with the companies on doing business in a socially responsible manner (find out more in our engagement report) and corresponding voting behaviour at annual general meetings.

How are bonds selected?

The Raiffeisen ESG indicator is also used to rate corporate bonds. Therefore, there is no difference in the assessment of equities and bonds from companies. By contrast, sovereigns are not comparable to companies when it comes to their actions and objectives. This is why Raiffeisen KAG’s fund management has worked diligently for years to develop a sustainability concept dedicated to investments in government bonds.

Attractive sectors in terms of sustainability

There are some sectors, such as tobacco, weapons, and gambling, in which Raiffeisen KAG does not invest as a rule (find out more in our sustainability policy). In other sectors, a high level of selectivity is exercised. For example, generators of nuclear energy do not find their way into the fund portfolio. In general, however, we see the sustainability trend spreading through more and more industries, albeit at different speeds and to different extents. The fund management seeks out and finds companies almost everywhere that conduct their business in a more responsible and sustainable manner than their competitors or that develop innovative sustainability solutions. The latter are often of particular interest to us and can be found in areas such as renewable energy, recycling, and IT.

*) Raiffeisen-ESG-Indicator: Raiffeisen Kapitalanlage-Gesellschaft m.b.H. continually analyses companies and countries with the help of internal and external research providers. Together with an overall ESG assessment including an ESG risk assessment, the results of the sustainability research are converted into the so-called Raiffeisen ESG Indicator. The Raiffeisen ESG Indicator is based on a scale of 0-100. The assessment is made in consideration of each company’s respective branch of business.

FNG stands for Forum Nachhaltige Geldanlagen