SEB Climate Focus High Yield
– Financing the future today
- an investment for the future today
With SEB Climate Focus High Yield Fund, you invest in a corporate bond fund making high-yield investments with a strong climate focus.
This Article 9 fund aims to invest in companies and projects that contribute to a sustainable future. Companies that already focus on sustainability issues today, have the opportunity to be at the forefront in a future that demands more sustainable solutions. Companies may adapt their current business models now or find new business opportunities that could be of significance in the future.
This is the essence of the fund
The fund primarily focuses on the Nordic region, where numerous companies lead the way in sustainability and climate initiatives. To ensure a well-diversified and liquid portfolio, the fund managers also incorporate investments in European companies. Moreover, the fund may invest in climate projects through green bonds.
Positive climate impact
The fund managers assess companies' commitment and capability to transform their business models for a positive climate impact. They diligently track companies' progress in lowering carbon emissions, enhancing resource efficiency, and their revenue being aligned with the EU's environmental taxonomy. The fund managers maintain ongoing communication with the portfolio companies to encourage and support their climate strategies.
Sustainability as an objective
The fund is classified as an Article 9 fund with sustainable investments as a goal according to EU's Sustainable Finance Disclosure Regulation (SFDR), also called dark green fund.
Past performance does not guarantee future performance. The value of investment funds and other financial instruments may rise as well as fall and there is no guarantee you will recover your original investment. The fund may invest up to 100 percent of its assets in fixed-income securities issued and guaranteed by any EU Member State, its local authorities, or public international bodies of which one or more of such Member States are members, or by any other State of the OECD, G20, Singapore or Hong Kong. More information can be found in the fund’s fact sheet, Key Information Document, prospectus, and sustainability information. These are available on www.sebgroup.lu.
Key figures based on data as of 31 March 2023
Sustainability KPIs based on data as of 31 March 2023
Questions and answers
Corporate bonds are debt securities issued by corporations to finance their operations or other business activities. Investment-grade corporate bonds are considered less risky and may offer lower yields than high-yield bonds. In contrast, high-yield bonds are issued by companies with lower credit ratings and offer higher yields to compensate for the increased risk of default.
Investing in corporate bonds, including high-yield bonds, can provide diversification benefits to a portfolio, as they typically have a low correlation to other asset classes such as stocks and traditional fixed income investments.
High-yield bonds can be attractive to investors seeking higher returns, but they come with a greater proportion of risk compared to traditional fixed-income investments or investments in corporate bonds with an investment-grade status. Default rates on high-yield bonds can be higher than investment-grade bonds, and the value of these bonds can be more sensitive to changes in interest rates or economic conditions.
We have a meticulous and well-documented process to select companies committed to positively impacting the climate. Our selection process assesses companies' willingness, ability, and concrete actions to contribute to a positive climate impact. All sustainable companies and projects must be approved by SEB Investment Management's ESG committee, and we conduct a thorough analysis of their operations, products, and services, focusing on their impact on the climate. Additionally, we evaluate their market positions and financial key figures from a credit perspective to determine their solvency. This comprehensive approach ensures that we invest in companies that share our values, have the potential for sustainable long-term growth, and contribute to a positive impact on the climate.
Our fund managers and the ESG team continuously monitor the companies in our portfolio and evaluate their performance to ensure they maintain their climate focus. SEB Investment Management AB is one of the largest fund management companies in the Nordic region, providing us with a solid position to engage in meaningful dialogues with the companies we invest in. Through our influence, we can encourage these companies to make sustainable choices.
The fund strongly focuses on climate factors, requiring each company to contribute to a positive climate impact while avoiding significant harm in any area. We also evaluate the management structure and employee relations of each company to ensure good corporate governance and that their practices do not harm other sustainability factors.
While sustainability-related features are significant in our investment decision-making process, we also carefully consider other characteristics detailed in the prospectus. When evaluating whether to invest in the fund, it is essential to consider all aspects of the investment, including risk and return potential, fees, and other relevant information in the prospectus.
The fund is categorised as an Article 9 fund with the objective to make sustainable investments.
By investing in sustainable companies, the fund aims to promote positive climate outcomes while generating financial returns for investors.
SEB Investment Management AB is experiencing increasing demand from investors who seek to invest in sustainable companies that can generate attractive returns while also having a positive impact on climate and society.
We firmly believe that investing in sustainable companies is a smart investment strategy that can deliver long-term returns for our investors. Our approach is based on the belief that sustainable companies are better positioned to succeed over the long term, leading to increased revenue and market share.
The fund is managed by Peter Tram and Charlotte Lind. Peter has a quantitative background and has been working in asset management since 2010, while Charlotte has extensive experience in the fixed-income market and corporate bonds.
Together, they use their skills and knowledge to create a sustainable investment strategy that aligns with the fund's values and objectives.
Yield to worst (YTW) is a measure that helps investors determine the minimum interest rate they can earn on a bond if they hold it until maturity, assuming no default on payments. YTW is calculated by considering the worst-case scenario during the bond's term, such as early prepayment or bond calls.
When assessing a portfolio of bonds, YTW can be used to evaluate the portfolio’s overall yield at a specific point in time. The portfolio's YTW is calculated by taking the weighted average of the YTWs for all the bonds in the portfolio. This provides investors with valuable insights into the risk and return potential of their overall bond portfolio.
"Yield to worst" should not be seen as expected return, but it provides an overview of the current return on the underlying investments of the fund, before any withdrawal of fees and costs related to currency hedging. The measure also does not take the prices of bonds and currency exchange rates into account.
Duration is a measure of how much a bond portfolio will be affected by changes in interest rates. By calculating the portfolio's average duration, investors can estimate how long it will take to recover their initial investment and how much the portfolio's value may go up or down if interest rates change.
Note that portfolios with longer duration are more sensitive to changes in interest rates. Knowing the duration of a bond portfolio can help investors make informed decisions based on their goals and risk tolerance. Using duration as a measure of risk, investors can select bonds to add to their portfolios that balance returns and risk.
Option-Adjusted Spread (OAS) is a metric used to measure the difference between the expected return of a bond portfolio and a comparable risk-free portfolio after adjusting for any options or other complex features present in the portfolio.
OAS helps investors evaluate the risk and value of a bond portfolio and compare it with similar investments. It also helps assess whether the complex collateral in a portfolio justifies the additional risk. OAS is a valuable tool for investors seeking to optimise their investment returns while minimizing risk.
Science-Based Targets initative (SBTi) is a leading action that helps companies reduce their carbon emissions and limit global warming. Companies that commit to Science-Based Targets (SBTs) pledge to lower their emissions enough to restrict global warming to no more than 2°C compared to pre-industrial levels.
SBTs provide a roadmap for companies to prioritize sustainability, manage resources efficiently, and promote long-term strategies that align with the Paris Agreement and the United Nation’s Sustainable Development Goals. SBTs are gaining popularity among companies seeking to demonstrate their commitment to minimizing their climate impact and leading the way to a more sustainable future.
SEB Investment Management AB is a wholly owned subsidiary of Skandinaviska Enskilda Banken AB. The fund company was formed May 19, 1978, with headquarters in Stockholm and organization number 556197-3719.