Bill Bovingdon talks next generation investing
The Green Files is a unique CEFC series where we talk to the people making a difference in the race to net zero emissions.
Tuesday 10 August 2021
Investing in the future of sustainable financial products
When it comes to seeing investment through green-tinted glasses, it’s fair to say that Bill Bovingdon has been ahead of the curve for years. Highly regarded for his expertise in fixed income, Bill pioneered Australia’s first sustainable bond fund back in 2014. Now, he has been instrumental in another first: the game-changing Australian Unity Green Bond Fund.
The first financial product of its kind launched in Australia, the Fund invests in a combination of green, social and sustainable fixed interest securities – with the primary purpose of helping to lower carbon emissions. It is managed by Australian Unity’s specialist cash and fixed interest team, Altius Asset Management, where co-founder Bill is the Chief Investment Officer.
Bill Bovingdon, Co-founder and CIO, Altius Asset Management
Democratising green bonds
“My main motivation in ESG investment and in developing things like the green bond market has always been around climate. I have always valued our natural environment, and for 15-odd years I’ve been concerned about the accelerating emergency in climate. Our goal with this Green Bond Fund was to take a nascent market to the next level – essentially to ‘democratise’ the product,” explains Bill. “A lot of the big investors are keen to hold green bonds, but it’s been difficult for smaller investors to access them.”
We wanted to create a fund where those with as little as $5,000 could invest. We believe that making green bond funds more widely available to smaller investors, will really increase their penetration and give people more options to invest green.Bill BovingdonCo-founder and CIO, Altius Asset Management
With a career spanning more than 33 years, Bill is in a unique position to interpret market trends. And one of the most promising shifts he’s seeing is the increasing influence of younger generations. “The young cohort is very concerned about the climate outlook. These people care about where their money is invested, knowing they won’t get it back for 30-odd years. Aside from retirees, this is actually the group that is the most engaged with their super,” says Bill.
“The challenge here is that they will typically have low balances. But relationships with the young cohort will pay off in buckets down the track. If you give them a good experience and are authentic in what you do, you’ll have customers for life.”
Maturing approach to ESG investment
Another promising trend he is seeing is the way in which the Australian market is maturing, including in its approach to investment through the lens of ESG – covering environmental, social and governance matters.
“Even 18 months ago, fund managers who had no real interest in ESG were trying to placate concerns of their investors with a ‘tick the box’ approach backed by no real process or experience. But now the market has moved beyond that. Now there’s a real degree of scrutiny on claims of ESG integration in investment processes and a need to demonstrate claims of expertise,” adds Bill.
The Australian Unity Green Bond Fund was made possible by a cornerstone investment from the CEFC, with the Fund marking an exciting new chapter for Australian investment. Adds Director of Investment Jasmin Jenkins:
We are in the early throes of a long-term trend toward sustainable finance, and market leaders such as Australian Unity will be a key part of this transition. Investment products that combine market returns with positive environmental outcomes offer an attractive way for investors to support Australia’s transition to a low emissions economy.Jasmin JenkinsDirector of Investment, CEFC
While the Green Bond Fund may be relatively new, its growth is already impressive. “It’s been almost 12 months since the launch, and the Fund has grown by more than 50 per cent in that time,” confirms Bill. “We aimed to get at least 0.5 per cent better than bond benchmark returns from the Fund, and we’re currently running at close to one per cent above, which is great. When you start out and it’s the first of its kind, you don’t quite know how well it will perform, so a strong start adds to our confidence in the value of a dedicated green bond fund for investors.”
Great scope for further innovation
“It’s also good to see that super funds are increasingly motivated by an ESG agenda. We’ve just welcomed the Non-Government Schools super fund, the first of the industry super funds to have invested in the Green Bond Fund.”
It’s clear that Bill believes there’s great scope for further innovation in the world of sustainable finance.
We always ask ourselves: how can we be involved in making the transition to decarbonisation faster, more robust and better funded?Bill BovingdonCo-founder and CIO, Altius Asset Management
“We are having discussions with people to see what’s happening elsewhere and how we can help progress in sustainable finance in general. I don’t think you can overstate the importance of nurturing these markets through their early days. It’s shows great foresight and leadership from the CEFC to have been there from the start.”