Part of the very essence of Triodos Bank is based on the power of three. Our name is derived from the Greek word "τρὶ ὁδος - tri hodos, which means ‘three roads’ and this formed the foundations of the Bank’s purpose - people, planet and profit.
It feels powerful therefore that for the first time in the UK there are now three Triodos Impact Investment Funds – the Triodos Global Equities Impact Fund, the Triodos Pioneer Impact Fund and the newest addition – the Triodos Sterling Bond Impact Fund. A truly impactful portfolio of funds all compiled and managed using seven sustainable transition themes, tracked against the United Nations Sustainable Development Goals.
Impact investing is one of our most powerful levers for change. It is arguably one of the most important things investors can do to help to tackle the climate crisis, uniting to become a force for good
With three funds in place we can, for the first time, offer a diverse impact investment portfolio. This fundamentally means the three funds offer different risk/return options for investors in two of the main investment asset classes – equity and now bonds. In addition, the new Triodos Sterling Bond Impact Fund is offered in pounds sterling – which is a first for the bank.
This is something that we have wanted for some time. We knew our investors would be interested in a fund not only offered in Sterling, but at a lower risk/return.
"The Triodos Sterling Bond Impact Fund is expected to be 3/7 in the risk return spectrum compared to the Triodos Global Equities Impact Fund and the Triodos Pioneer Impact Fund at 5/7 and 6/7 respectively," Griffiths continued.
"It offers us the opportunity to provide impact investments to suit the different risk appetites of our investors. In addition, it offers investors the chance to build an impactful diverse portfolio just with our investments, or for anyone looking to diversify their existing portfolio (which might be predominately made up of traditional investments) it offers the opportunity to add an impact investment at a lower risk.”
But why is diversification important not only to Triodos, but for investors? To put it simply, it helps to create balance in your portfolio and spreads the risk.
While risk is inherent in all investments, different people have differing appetites for risk. This can depend on an investor’s experience of investing, knowledge of the product and trust of the organisation offering it, what they want that investment to do and how long they want their money invested - all of these and more help to make up their risk appetite.
Equity investments are generally higher risk than bond investments, meaning they can offer the potential for greater losses or more reward, but they also offer voting rights. Triodos Investment Management (who manage the funds) represent the voice of Triodos investment fund customers, as a shareholder and actively vote either for or against proposals from companies which do or do not align with the Triodos vision.
The Triodos Sterling Bond Impact Fund is comprised of corporate bonds and government gilts (which are generally perceived to be more ‘stable’) as well as green and social bonds. Bonds are generally considered to be lower risk/lower return than equity investments.
Impact is delivered by identifying sustainable companies using our themed investing approach and providing them with funding by purchasing bonds they have issued. The fund manager of the Triodos Sterling Bond Impact Fund goes further by providing active stewardship to encourage the organisations involved to adopt more sustainable practices and projects.
Investing is, and always should be, a personal choice and should be well researched. If you are unsure if investing is right for you, it's a good idea to ask for independent financial advice.
However, it is hoped that with a broader and more diverse range of Impact Investment Funds on offer from Triodos this will encourage the industry as a whole to scale and grow so that more impact investors make their mark on the world by valuing the impact of their investments alongside the financial returns. This growth will then in turn help to quicken the pace towards a more sustainable economy actively focused on and invested in creating a healthier planet for the future.
With all investing, your capital is at risk. The Triodos Impact Investment Funds should be seen as long-term investments (five years or more), as their value can go down as well as up and you may not get back what you put in.
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