Nikko AM, World Bank Team Up To Launch Green Bond Fund

Jan 28 2010 | 9:54am ET

Japan-based Nikko Asset Management is gearing up to launch an open-ended investment trust—the SMBC Nikko World Bank Bond Fund—next month.

The fund was developed by Nikko AM in partnership with the World Bank and will invest in World Bank green bonds offered in a variety of currencies.

World Bank green bonds support World Bank-funded projects that are designed to tackle the causes and consequences of climate change in the developing world. The types of projects that may be supported by World Bank green bonds include alternative energy installations, funding for new technologies that reduce greenhouse gas emissions, and reforestation. Since the product was introduced in November 2008, the World Bank has issued the equivalent of approximately US$960 million of green bonds.

The SMBC Nikko World Bank Bond Fund is the world’s first fund developed in cooperation with the World Bank that invests in World Bank green bonds. Investors who purchase this fund support the World Bank and its member countries in their efforts to address the climate change challenge and the effects of global warming.

The launch of the new fund marks the second time that Nikko AM has worked together with the World Bank to create an open-ended investment trust for the Japanese market, following on from the highly successful World Supporter Fund. The World Supporter Fund was established in 2007 and is composed primarily of World Bank bonds denominated in various emerging market currencies.

“Tackling climate change will take immense resources that will only come from a well-orchestrated flow of public and private finance. The SMBC Nikko World Bank Bond Fund provides investors an opportunity to be part of this effort. We appreciate the support from Japanese investors as it demonstrates that private citizens can safely and profitably invest their savings today while also helping provide a better world for their children,” said Robert Zoellick, president of the World Bank Group.

“There is an increasing awareness of global environmental problems. The issue is so critical that it could literally affect our very survival. Large scale projects and restructuring needed for fixing these problems require significant funding as well as expertise. This is where the World Bank may play an extremely important role. Reputable international organizations such as the World Bank are able to help us address this growing worldwide crisis. They specifically have the ability to engage actively in overseeing projects and help in risk management. Nikko AM has taken the lead to collaborate with the World Bank to create this green fund which is expected to provide good returns with solid risk management in place. This will give investors an opportunity to help the world,” said Timothy McCarthy, Nikko AM’s chairman and CEO.


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