Nordea Asset Management unveiled its latest offerings in the sustainable investment landscape, introducing two new funds aimed at balancing returns with impact, the asset manager last week. The launch of Nordea 1 – European Corporate Sustainable Labelled Bond Fund and Nordea 1 – European Sustainable Labelled Bond Fund marks the inception of a family of sustainable labeled bonds. Domiciled in Luxembourg, both funds have received the article 9 classification under the Sustainable Finance Disclosure Regulation and will be overseen by Nordea’s credit team and fixed income rates team, respectively.

The emergence of sustainable and labelled bonds as an asset class has witnessed significant growth in recent years, with the European market now valued at approximately €480bn, noted Nordea in the press release. This surge is attributed to various factors, including the escalating need within the EU to finance sustainable projects. Against this backdrop, there has been a noticeable shift in demand towards sustainable bonds funds from asset allocators, indicating a departure from a thematic approach towards asset-class based investing. Nordea emphasised that the introduction of these article 9 funds serves to meet this growing demand, providing asset allocators with new tools to integrate into their sustainable portfolios.

The European corporate bond fund will primarily focus on euro-denominated corporate investment grade labelled bonds and non-labelled corporate bonds linked to activities contributing to environmental or social objectives, while the other bond fund will concentrate on euro-denominated investment grade labelled bonds issued or guaranteed by sovereigns, sub-sovereigns, supranational or government-owned entities, said Nordea.

In the announcement, Christophe Girondel, global head of distribution at Nordea Asset Management, emphasised the funds’ suitability for asset allocators seeking to develop sustainable fixed income portfolios.