Now, just over six months on from the fund’s launch, we spoke to the TSBIF fund manager William de Vries about its progress and what his aspirations are for its future.

Six months on, is the fund where you expected and planned for it to be?

I am happy with how the fund has developed – there has been a gradual, but continuous amount of investment since its launch. The fund was always designed to deliver positive impact, but at a lower risk and that continues. Yields have been rising slowly in the UK and the expected yield is now 0.7% – higher than UK gilts alone which is usually around 0.4%. The fund also started with around £5 million pounds of investment, but now it’s at £8 million and is growing month-by-month.

We’re pleased that the fund was also awarded the renowned 3D Investing label at the end of 2020. TSBIF received a AA rating, providing an independent verification of its responsible investment credentials and credibility.

Has the breakdown of the different types of bonds and UK gilts changed with more investment?

Yes it has and that has always been our plan. It’s important to permanently have some liquidity in the fund as this helps us to keep the risk lower, but we wanted to add more companies and bond types into the portfolio as it evolved as this helps to deliver more impact and to create a nice level of diversity. At launch there were about nine positions (issuers in the fund) and we now have 25 positions from 14 different issuers with the expectation that this will rise to over 40 by the end of the year. Current issuers include East Japan Railway, SNCF (French National Railway Company) and United Utilities.

How about the new NS&I Green Savings Bond that was recently introduced by the UK Government, could that now be considered for inclusion?

Potentially, yes, we are looking at it at this moment. It was a welcome introduction as the UK Government was certainly behind its counterparts in Europe with regards to green bond offerings. However, it would need to meet our strict standards in order for it to be included, so watch this space!

Talking about green bonds, we have certainly seen a lot of interest in them within the media and the industry as a whole, are there now more to choose from?

The amount of green bonds being launched is increasing; however, the demand currently outstrips the supply. They have been referred to as like ‘gold’ at the moment, so there’s a need to be quick when they become available.

How unique is the fund?

Impact investment bonds are few and far between in the marketplace, so TSBIF is relatively unique. By opening up the impact investment marketplace to offer bonds and equities it helps it to grow and diversify, so it was an important step for us in the UK. What sets us apart is that we are a pure impact player in the market, along with our reputation and history in the industry and that we have a wide range of impact themes matched against the Sustainable Development Goals.

Finally, what are your hopes for the fund at the end of its first year and beyond?

My hope is that it will continue to attract investment and I anticipate that it could reach £20 million by its first anniversary. As I mentioned, the vision is to use this investment to add more companies into the portfolio and ensure as many of our impact themes are reflected in the fund offering as possible so that it delivers a rounded level of impact. I also hope as it grows so will the awareness of the fund and that this encourages more impact investors to explore it as a possible addition to their investment portfolio.