Fidelity International has launched its Fidelity Funds 2 - Blue Transition Bond Fund, aimed at addressing the growing challenges facing oceans and freshwater ecosystems. The Luxembourg-based Sicav undertakings for collective investment in transferable securities (Ucits) fund was announced in a press release on 14 October 2024, as part of Fidelity’s broader commitment to sustainable investing. The initiative focuses on capital growth by supporting the transition to healthier marine and freshwater systems.
The new fund responds to a critical need for investment in the protection and sustainable management of oceans, rivers and other water systems, areas that remain significantly underfunded, stated Fidelity. According to the United Nations, the “life below water” sustainable development goal (SDG) is the least funded of all 17 SDGs, followed closely by “clean water and sanitation,” which ranks as the sixth least funded. These funding gaps underscore the urgency of initiatives like the Blue Transition Bond Fund, reasoned Fidelity.
The fund aims to invest in global bonds that contribute to ocean and freshwater sustainability. Kris Atkinson, one of the portfolio managers, highlighted that the bond market, due to its size and diversity of issuers from both public and private sectors, is well-positioned to support the blue transition. The portfolio will include bonds from issuers that align with key objectives, such as improving water-related risk management, financing ocean and freshwater sustainability projects and reducing the impact of climate change on water ecosystems.
A minimum of 80% of the fund’s investments will be allocated to bonds that meet the environmental or social characteristics promoted by the fund. This includes blue bonds, a sub-category of green bonds, which specifically finance ocean and freshwater-related projects. However, as Atkinson explained, blue bonds alone are insufficient for delivering the necessary capital and impact. A more comprehensive approach at the issuer level is required, looking at how companies operate and their broader alignment with sustainability goals. Atkinson will serve as co-manager of the fund, alongside Shamil Gohil.
Fidelity’s Blue Transition Bond Fund is part of a wider strategy to provide thematic fixed-income investment solutions addressing environmental and social challenges, with a particular focus on the UN SDGs.