nordic covered bonds multi currency

Alfred Berg Nordic Investment Grade – Nordic Credit Investment Grade

HIGHLIGHTS

Nordic – Low Risk – Diversification – Short Duration – NOK Exposure**

STRATEGY

Alfred Berg Nordic Investment Grade is an actively managed fixed income fund that primarily invests in Nordic Investment Grade bonds and money-market instruments. The instruments will primarily be issued by governments, municipalities, corporates and financial institutions in the Nordics. At least 75% of the fund net asset value will be invested in instruments with official ratings from Moodys, Standard & Poors or Fitch. The fund can invest up to 10% of its net assets in instruments rated below investment grade, but not lower than BB/Bb2. The fund composition will reflect the Portfolio Manager view on single issuers, relative value among issuers, sectors and markets, as well as potential changes in market structure and framework. The interest rate risk, measured by modified duration, will remain below 1 at all times. The fund can invest in NOK, SEK, DKK, EUR and USD and all investments in instruments other than NOK will be hedged to NOK. The fund is well diversified and has a moderate credit risk but will nonetheless be affected by changes in credit spreads for specific issuers and/or sectors. The fund is a UCITS fund, with the possibility to invest in derivatives.

KEY DATA

ISIN:
NO0010752538

Inception date:
08/12/2015

Portfolio Manager:
Morten Steinsland, since 08/12/2015

Risk profile:
2 of 7, where 1 is lower expected risk and expected return and 7 is higher expected risk and higher expected returns

Minimum investment:
300 NOK

Management fee:
0,40%

Entry/Exit fee:
No entry or exit fee, but a anti dilution levy may be charged

** Foreign exchange risk (up to 100% of the fund’s net asset)

Responsible investments:

Philosophy and process for sustainable and responsible asset management in Alfred Berg.Alfred Berg asset management aims to create the best possible risk-adjusted return for our customers. To understand risk associated with the companies we invest in, our approach to sustainability and accountability is an essential element. We invest in companies that contribute to sustainability and responsibility, gaining of the best possible risk-adjusted return.

The focus on sustainability and responsibility based on four pillars:

  • Exclusions
  • ESG analysis
  • Integration of risks related to sustainability and responsibility.
  • Clear process for dialogue and active ownership.

 

Exclusions

  • We exclude companies that violate international standards such as the UN Global Compact, the International Labor Organization (ILO) and human rights. We also exclude companies with more than 5% of sales from alcohol, tobacco, pornography and controversial weapons.

 

ESG analysis

  • Alfred Berg’s ESG analysis is based on BNP Paribas Asset Management’s (BNPP AM)’s self-developed ESG analysis. We use BNPP AM’s methodology, resources and results. For companies, organizations or entities that BNPP AM’s analysis do not covered by, we use BNP Paribas’ framework and analysis tools in a separate analysis. Alfred Berg can also use other external actors with their own analysis methods. The goal is to have mainly 90% of the companies in our portfolios covered. Read more about ESG analysis here: BNP Paribas Asset Management – BNPP AM – Corporate (bnpparibas-am.com).
  • The analysis results in a total score for ESG risk for each individual company, as well as a separate score for environmental risk (E), social risk (S) and corporate governance risk (G). Each company’s total score ranked in relation to other companies within the same industry.
  • The score for all the companies in our portfolio is added together and results in a total ESG risk profile for each fund.

 

Integration of risks related to sustainability and accountability

    • Integration of ESG risk ensures that we understand and take into account a larger part of the risk picture associated with our investments.
    • Integration of ESG risk contributes to investing in companies and building portfolios, which adds to the goal of a well risk-adjusted return.
    • All of our actively managed funds have clear requirements for sustainability and accountability. The requirements will vary from fund to fund, and given by the funds mandate. These requirements can be in the form of quantitative targets relative to index or comparable groups, there can be targets for carbon footprint, exclusion of certain sectors, and ¨best in class¨ targets or targets to reach a given share of green bonds.

 

Clear process for dialogue and active ownership

  • Active ownership is an integral and important part of a sustainable and responsible administration. We are active owners, and use company dialogue and voting to influence companies and organizations we invest in. Active ownership used correctly can reduce risk, clarify values and at the same time have a positive effect on the companies and the world around us. It is therefore important to help influence companies not only publish financial information, but also information related to corporate governance and other non-financial information.
  • Alfred Berg believes that active ownership is generally more effective than exclusion, but exclusion can be an effective last resort. We will be able to contribute to developing and complying with high standards in sustainability, social standards and corporate governance for companies that are a part of our portfolio. This includes work in nomination committees to ensure competency in boards on Norwegian listed companies, in addition to voting at general meetings and an ongoing dialogue with management. This can also help companies that currently have a low ESG score to move in the right direction.
  • Our process for active ownership is well documented in our internal analysis tools, in addition to the fact that we publish our voting, which you can find here (Alfred Berg Kapitalforvaltning – SRD2 – rapportering av stemmegivning for aksjer i porteføljer og mandater). We use ISS to assess whether notices of general meetings are in accordance with industry recommendations and good corporate governance.

 

ESG risk and impact on expected return

The lack of common or harmonized definitions and labels that integrate ESG and sustainability criteria at EU level can lead to different approaches when setting ESG targets. This means that it can be difficult to compare strategies that integrate ESG and sustainability criteria’s. This is because of the extent of selection and weighting applied to selected investments, which may have the same name, but have different underlying meanings. By evaluating a risk based on ESG and the sustainability criteria’s, managers can also use data provided by external ESG data providers. Given ESG developments, these data sources may be incomplete, inaccurate or inaccessible. Applying responsible strategies in the investment process can lead to the exclusion of securities from certain issuers. Consequently, the fund’s return may at times be higher or lower than the return of similar funds that do have such standards.

 

Environmental and social characteristics that the fund promotes.

In the management of the fund, we exclude companies:

  • That violates international norms where some important ones are mentioned here:
    • UN Global Compact – 10 principles in these 4 areas:
      • Human rights – Potential negative effects where people are treated unfairly – We do not invest in companies that do not respect this – data source MSCI
      • Exploitation of people – Potential negative effect where people are exploited – We do not invest in companies that do not respect this- data source MSCI
      • Environment – Potential negative effect on the environment – We do not invest in companies that do not take relevant environmental responsibility – data source MSCI
      • Corruption – Potential negative effect on justice in society – We do not invest in companies that do not take relevant responsibility in connection with corruption – data source MSCI
    • ILO – International Labor Organization – 8 fundamental conventions:
      • Freedom of labour organizations – Potential negative effect where people are exploited – We do not invest in companies that do not respect this- data source MSCI
      • The right to collective agreements – Potential negative effect where people are exploited – We do not invest in companies that do not respect this – data source MSCI
      • Conventions against forced labor – Potential negative effect where people are exploited – We do not invest in companies that do not respect this – data source MSCI
      • Minimum age for work – Potential negative effect where children are exploited – We do not invest in companies that do not respect this – data source MSCI
      • Child labor – Potential negative effect where children are exploited – We do not invest in companies that do not respect this – data source MSCI
      • Equal remuneration – Potential negative effect where people are exploited – We do not invest in companies that do not respect this – data source MSCI
      • Discrimination – Potential negative effect where people are exploited – We do not invest in companies that do not respect this – data source MSCI
  • Which produces / transmits products with undesirable negative effects:
    • Alcohol – Potential negative effect on society, children and family life, as well as health – We do not invest in companies that have more than 5 % of their production or distribution of this – data source MSCI
    • Tobacco – Potential negative effect on health – We do not invest in companies that have more than 5 % of their production or distribution of this – data source MSCI
    • Controversial weapons – Potential negative effect on war victims – We do not invest in companies that have more than 5 % of their production or distribution of this – data source MSCI
    • Pornography – Potential negative effect on people who are exploited – We do not invest in companies that have more than 5 % of their production or distribution of this – data source MSCI

 

We exercise active ownership to influence companies for improvement. This can be done through voting or via direct contact with the company on important matters, such as their sustainability effects that we believe the company must do something about. We can do this on our own, but also together with other stakeholders. Companies that do not meet our expectations, we can choose not to invest in.

Some of Alfred Berg’s funds deviate from what described above:

  • They may have stricter criteria, such as excluding the production of fossil fuels, which have a very negative effect on the environment via carbon dioxide emissions that contribute to the strength of the climate crisis. These funds are:
    • Alfred Berg Nordic Small Cap ESG – Production of fossil fuels and their use in electricity production – Known negative effect on the environment – We do not invest in companies that conduct this type of activity
    • Alfred Berg Nordic High Yield ESG – Production of fossil fuels and their use in electricity production – Known negative effect on the environment – We do not invest in companies that conduct this type of activity
  • They may have less stringent criteria’s, such as index funds or quantitative strategies. These funds are:
    • The Alfred Berg Index will replicate the OSEBX composition on the Oslo Stock Exchange and therefore does not take into account the negative effects of the investments.
    • Alfred Berg Disruptive Technology (link to own Art 8 text where alcohol is taken out)

 

As part of BNP Paribas Asset Management, Alfred Berg is to be included in BNP Paribas Asset Management’s guidelines for responsible business operations. As described here: https://www.bnpparibas-am.com/en/sustainability/as-a-company/

This is marketing material by Alfred Berg Kapitalforvaltning AB / Alfred Berg Kapitalforvaltning AS. Past performance is no guarantee of future results. Performances are calculated net of fees. Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: Alfred Berg Kapitalforvaltning AB / Alfred Berg Kapitalforvaltning AS / BNP Paribas Asset Management.

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Jérôme GUILBAUD

Investment Specialist

+47 91 63 23 70

jerome.guilbaud@alfredberg.com

Investments in funds are always related to risk. Past performance is no guarantee of future results. Performances are calculated net of fees. Investments in funds are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment.