Calvert News & Commentary

Calvert Green Bond Fund: Harness the full potential of green investing

10/31/2013

Untitled Document

Calvert has launched the Calvert Green Bond Fund (CGAFX), the first green fixed-income fund that invests in a broad portfolio of securities that are focused on environmental solutions or issued by companies considered to be environmental sustainability leaders.

Bonds focused on environmental solutions or issued by environmental sustainability leaders are an essential component of core-bond allocations, and present investors with a long-term opportunity to diversify and enhance total returns. This opportunity can be uniquely realized through Calvert Green Bond Fund.

Green Bonds – A Compelling Investable Premise

Green investing is a fast-growing market

According to the International Energy Agency (IEA), an additional $5 trillion (a doubling) of investment in clean-energy and low-carbon technology is necessary just to satisfy the IEA's 2020 target goals designed to limit global warming, and another $36 trillion (35%) must be invested before 2050 to meet longer-term targets.

Green bonds will play a key role in a lower-carbon economy

The lower-carbon, sustainable global economy called for by the IEA is being rapidly and widely embraced by corporations, governments, and NGOs around the world. Engaging and partnering with the capital markets will be key to realizing this new economy, and green bonds will play an important role in both growing climate-friendly industries to critical mass, and facilitating other green projects that support these goals.

Calvert: Playing a lead role in developing and shaping this investable premise

By working directly with the private sector and governments to promote green bond issuance, and contributing to global dialogue on setting green standards, Calvert is helping to widen the green investable universe to promote both investment opportunity and advance sustainability. Calvert considers "green" bonds to include:

  1. Private and public sector bonds that support environmental sustainability projects, such as clean energy development and technology; smart growth and transit.
  2. Bonds issued by corporate leaders in environmental sustainability.
  3. Structured securities that are collateralized by assets supporting environmental themes.

Calvert Green Bond Fund – Well Positioned to Capture the Investment Opportunity

Calvert Green Bond Fund is dedicated to harnessing the full power of green investment opportunities and providing solutions to environmental challenges.

Active management that integrates rigorous financial and environmental analysis

The Calvert Green Bond Fund will be steered by the same seasoned leadership team of fixed-income and sustainability professionals who have been responsible for the successful execution of Calvert's ESG Green Fixed-Income Strategy.

"Our allocation to non-index sectors, markets and issuers increases diversification and enhances the potential for higher returns," said Co-Portfolio Manager, Vishal Khanduja. "Our top down fundamental analysis combined with rigorous bottom-up security selection helps us identify sectors and issuers with the best risk adjusted return potential." Adds Bennett Freeman, SVP and head of Calvert's sustainability research team: "The costs of inaction on climate change are clearly greater than the costs of taking practical steps to address it, and increasingly, corporations and governments understand this; green bond issuance is burgeoning as a result."

Portfolio Management Team

Cathy Roy, CFA: Chief Investment Officer, Fixed Income
Vishal Khanduja, CFA: Portfolio Manager
Mauricio Agudelo: Portfolio Manager

Bennett Freeman: SVP, Head of Calvert's Sustainability Research Team
Rebecca Henson: Senior Sustainability Analyst

Who Should Consider Investing?

The Calvert Green Bond Fund can benefit a wide range of investors by diversifying a core-fixed-income holding, and offering the potential for enhanced return through green investments.

Institutional investors such as foundations, endowments, and family offices seeking strategies that fulfill responsible and sustainable investing mandates.

Retirement plan sponsors cognizant of their fiduciary duty to incorporate ESG factors in their financial analysis and satisfying participant demand for sustainable investment options.

Individual investors seeking to diversify a core fixed-income holding with a sustainable investment solution.

Investment Objective and Principal Investment Strategies

The Fund seeks to maximize income, to the extent consistent with preservation of capital, primarily through investment in bonds, across a broad range of credit quality, with a focus on opportunities related to climate change and other environmental issues.

Under normal circumstances, the Fund invests at least 80% of its net assets in "green" bonds. Bonds include debt securities of any maturity. The Fund will provide shareholders with at least 60 days' notice before changing this 80% policy. The Fund typically invests at least 65% of its net assets in investment grade, U.S. dollar-denominated debt securities. The Fund uses an active trading strategy, seeking relative value to earn incremental income. The Fund's investment process is enhanced by the Advisor's fundamental investment research, which seeks to add value by integrating traditional fundamental security analysis with the Advisor's proprietary views on critical environmental, social and governance issues.

Resources for Financial Advisors and Investors at Calvert.com

Calvert Green Bond Fund Profile (includes investment objectives, principal investment strategies and risks)

Calvert Green Bond Fund and the Green Investment Opportunity (PDF)

ABOUT CALVERT INVESTMENTS

We are the leading investment management company using sustainability as a platform to create value for institutional investors, financial advisors and their clients.

INVESTMENT RISK

Investment in the Fund involves risk, including possible loss of principal invested.

Investing primarily in green investments carries the risk that, under certain market conditions, the Fund may underperform funds that invest in a broader array of investments. In addition, some green investments may be dependent on government tax incentives and subsidies, and on political support for certain environmental technologies and companies. The green sector may also have challenges such as a limited number of issuers and liquidity in the market, including a robust secondary market.

The Fund is subject to interest rate risk and credit risk. When interest rates rise, the value of fixed-income securities will generally fall. In addition, the credit quality of the securities may deteriorate, which could lead to default or bankruptcy of the issuer where the issuer becomes unable to pay its obligations when due.

Learn more about how the Calvert Green Bond Fund can diversify your portfolio. Individual investors may contact Calvert at 800.368.2745, financial advisors may contact Calvert at 800.368.2750 and institutional investors may contact Calvert at 800.327.2109.



#13598 (10/13)