But before we delve deeper, what are bonds and why are they different?
To quote the description from our A to Z of Impact Investments:
Bonds are available in different forms – they can be issued by companies or governments, and some have pre-defined ‘use of proceeds’, such as green or social bonds. The sale of these types of bonds are designated for specific projects with an environmental or social benefit.
That’s why we’re proud to have recently launched our latest Impact Investment Fund – the Triodos Sterling Bond Impact Fund, which invests in a range of bonds issued by sustainable companies, as well as gilts issued by the UK government.
Here are seven reasons why our new Triodos Sterling Bond Impact Fund might be of interest to you.
1. Lower risk
While risk is inherent in all investment products and fund values can go down as well as up, bonds are traditionally classed as ‘lower risk’ relative to equity funds (such as the Triodos Global Equities Impact Fund and the Triodos Pioneer Impact Fund), which offer the potential for greater losses as well as more reward. Because of this, impact bonds might be suitable for anyone looking to begin impact investing or to help balance their portfolio of ethical or traditional investments.
2. A sterling investment
The Sterling Bond Impact Fund is available in UK pounds sterling, which is a first for Triodos. This means that the total returns are not subject to the euro-sterling exchange rate.
You can invest tax-free in the Triodos Sterling Bond Impact Fund via a Triodos Stocks & Shares ISA . The total ISA allowance per person is £20,000 per year. Remember that the tax benefits of ISAs may change and depend on your individual circumstances.
4. Active Fund management
Although bonds don’t offer voting rights in the same way as shares and equities, Triodos, through its fund management, will be actively involved in trying to encourage the organisations issuing the bonds to adopt wider sustainable practices wherever possible - supporting them with ideas and best practice.
If you have existing investments, be they impact or traditional investments, adding the Triodos Sterling Bond Impact Fund to your portfolio might help to diversify and manage your risk, especially as bonds are longer-term investments.
6. Low savings’ interest rates
Currently, more people might be considering their options and thinking of moving their savings into investments because of low savings’ interest rates. Ethical savers might seize the opportunity to consider impact investments which invest in their future and address global sustainability challenges at the same time.
However, it’s important to be aware that investing is not the same as putting money in a savings account - your capital is at risk, meaning you may not get back to the amount you put in.
Last but my no means least! The Triodos Sterling Bond Impact Fund helps to deliver positive change through environmental and social impact in companies and projects, both in the UK and abroad.
With all investing, your capital is at risk. The Triodos Impact Investment Funds should be seen as long-term investments (five years or more), as their value can go down as well as up and you may not get back what you put in.
Triodos Bank doesn’t offer financial advice, so if you're unsure which investment is right for you, it’s a good idea to ask an independent financial advisor.