«Our Global Climate Transition Credit strategy is suitable to all investors»
I was invited by Justine Vroman from Aviva Investors a few days ago to learn about their investment strategy. We met on the top floor of the Aviva Tower, which offers a spectacular view of the London skyline. I learned a lot in the 30 minutes. Justine is an excellent professional and the investments she manages have a strong track record. At the end we exchanged a few personal words. It was a great meeting! Thomas J. Caduff, CEO, Fundplat LLC
• Caduff: Mrs. Vroman, what does a classic working week look like for you?
Vroman: As a global credit portfolio manager, much of my focus is interpreting the macro environment and allocating risk in terms of region, sector and maturity. Factors like fundamentals, valuations, bond supply and fund flows influence spread direction. I meet daily with our credit analysts, traders and economists, while aiming to take advantage of opportunities between issuers, seniorities and bonds in various currencies (although FX is fully hedged). As a climate-aware bond investor, thinking about downside risk and the long-term resilience of a portfolio is also fundamental and I collaborate with our climate and ESG specialists to identify the risks and opportunities at a sector and company level. I also regularly meet with issuers as part of our climate engagement program.
• Caduff: Why is the topic of Climate Transition so interesting in Credit?
Vroman: Extreme heatwaves in China, floods in South Korea, wildfires in Greece; these are proof points that climate change is here, posing risks to investment portfolios and client wealth. Many firms are already experiencing the physical impacts and transition risks such as regulatory penalties, technological advances, or changes in consumer preferences. As such it should play a part in any assessment of an issuer’s creditworthiness. While companies are grappling with high rates and inflation, we expect spread tearing between climate leaders and laggards to increase going forward. Furthermore, bondholders can have more influence than shareholders over the largest emitters, some of which being state controlled in a sector like electricity generation where transition capex are largely debt-funded.
• Caduff: Which product solutions can you offer for which investor category?
Vroman: Our Global Climate Transition Credit strategy targets solution providers and transition-oriented companies and is suitable to all investors. It aims to mitigate climate risk while delivering the benefits of traditional investment-grade credit, including consistent income and capital growth. Our holistic approach opens a broader opportunity set, offering more diversification and arbitrage compared to Green Bond funds. While we exclude fossil fuels, we invest in some high emitting issuers with tangible decarbonisation plans; together with engagement, we target real-world outcomes notably encouraging companies to set science-based targets. In our view this will be more effective at driving change rather than Paris Aligned-type strategies which simply exclude companies key to the transition.
Justine Vroman joined Aviva Investors in 2020 as a Senior Portfolio Manager in London. She manages global Investment Grade portfolios and co-leads the «Climate Transition Global Credit Fund» that was launched in 2021. She previously worked at Pictet Asset Management in Geneva and London as a Senior Investment Manager. She managed above 2,5 bn Euros assets under management (AuM) across several Euros and US Dollars Credit Investment Grade strategies, including a «Short-Term Corporate Credit Fund» and a «Global Sustainable Credit Fund». Justine Vroman graduated in 2009 with a Master’s in Management from EDHEC Business School (France) and an MSc in Finance from the University of Strathclyde (UK). She is also a Certified International Investment Analyst (CIIA) and holds a Certificate in Climate and Investing issued by the CFA Society UK and a Certificate in ESG Investing issued by the CFA Institute.
Thomas J. Caduff is the CEO of Fundplat LLC. He has worked in the financial industry for over 40 years. His professional experience includes roles at the stock exchange commissariat of the Canton of Zurich, Bank Vontobel, Credit Suisse and UBS. Thomas J. Caduff also served for three decades in one division and multiple brigades of the Swiss Army, as a communication/media officer.