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Nikko AM to launch World Bank green bond fund

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Nikko Asset Management intends to launch an open-ended investment trust on 19 February called the SMBC Nikko World Bank Green Fund.

Sumitomo Mitsui Banking and Nikko Cordial Securities expect to accept applications for the new investment fund from 1 February.

The fund was developed by Nikko AM in partnership with the World Bank aimed at investing 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 USD960m 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 the 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 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 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,” says Robert B. Zoellick, president of the World Bank Group.

“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,” adds Timothy F. McCarthy, Nikko AM’s chairman and chief executive.

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