Lombard Odier Investment Managers is in talks with investors over its climate bond investment strategy as it seeks to top up the $240 million it has raised from private clients with institutional money.
The LO Funds-Global Climate Bond Fund was launched in partnership with London-based fixed income specialist Affirmative Investment Management in March. The open-ended vehicle had over $190 million of assets under management at that time.
The investment manager has had initial discussions with institutional investors in a bid to expand the client base of the fund and has received a positive feedback from roadshows, Bertrand Gacon, head of impact office at Lombard Odier, told Infrastructure Investor.
The strategy singles out labelled green bonds as its main source of investment opportunities, but the LO-AIM team is also looking at unlabelled climate-aligned offerings and social and sustainable bonds.
Products with poor impact reporting and lack of transparency are excluded under the investment criteria. The strategy has identified $110 billion of bond issuance meeting its highest verification standards of impact investing so far, Lombard Odier said.
As of end of April, about half of the fund has been invested in North America, followed by Europe with a 40 percent allocation. Exposure to Asia Pacific accounted for less than 10 percent.
However, Gacon noted that it takes time to educate investors on the philosophy of impact investing – and even longer when they are institutional.
“There are no incentives for investors to say no to impact investing,” said Gacon, adding that portfolios with an impact investing tilt could offer just the same return as “conventional” investment solutions with even lower risk.