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Kreditanstalt für Wiederaufbau (KfW) case study

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This is a marketing communication. Please refer to the prospectus of the Fund and to the KIID / KID and/or offering documents before making any final investment decisions. Please refer to the risks section at the bottom of this page. 

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What is it?

KfW1 is a German development bank, which aims to promote sustainable economic, social and environmental development both within Germany and worldwide. Through its financing, the development bank aims to support projects and initiatives that contribute to economic growth, job creation, and social welfare, while also addressing environmental challenges and fostering sustainability.

 

Examples of projects financed by KfW’s green bond aim to mitigate climate change by financing the construction of new energy-efficient buildings, alongside improving the energy efficiency of existing residential, commercial, and municipal buildings.

Why do we own it?

The proceeds of this particular issuance have been used to finance the construction of 42 energy-efficient apartments in the Hamburg Metropolitan area. These buildings produce more energy than they use, pioneering innovative technologies which could be rolled out to future housing developments. This project was the winner of the “KfW Construction Award 2020” in the category “New building”; in our opinion, the project is aligned with our Resource Efficiency impact theme as well as UN SDGs 7, 9 and 11, fitting our impact thesis while, as a highquality security, also offering liquidity and potentially attractive financial returns.

COMPETITIVE ADVANTAGE – Impact

As one of the world’s largest financiers of climate action and environmental protection, we believe KfW is in a unique position to tackle climate change, backed by the German government which has set an ambitious goal of increasing the share of renewable energy in its electricity mix to 65% by 2030. Through financing renewable energy and energy efficiency projects, KfW is facilitating the accelerated expansion of renewable electricity and energy-efficient buildings primarily in Germany, as well as surrounding European countries, delivering progress towards its goal of achieving net zero by 2050. 

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Key points for KfW

  • Supporting job creation, social welfare and environmental solutions in Germany and worldwide.
  • In 2022, the projects financed by this specific green bond contributed to the avoidance of 1.9 million tons of greenhouse gas emissions.2
  • In our view, the labelled bond framework of KfW, which aligns with the ICMA Green Bond Principles, is robust. 
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The example shown is presented for illustrative purposes only. It should not be assumed that an investment in the example has been or will be profitable. The commentary should not be taken as advice on an individual stock. Please refer to the annual and semi-annual report for the full holdings.

1All information can be found on KfW’s website.

2Global Impact Bond report, Wellington Management, June 2023. 

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Consider the risks

Investors should consider the risks that may impact their capital, before investing. The value of your investment may fluctuate from the time of the original investment. Please refer to the risks section enclosed. A decision to invest should take account of all the characteristics and objectives described in the prospectus and KIID/KID and/or offering documents. Please refer to the sustainability related disclosures for information on the commitments of the portfolio: www.wellington.com/en/legal/sfdr. 

Risks

Below Investment Grade: Lower rated or unrated securities may have a significantly greater risk of default than investment grade securities, can be more volatile, less liquid, and involve higher transaction costs. | Capital: Investment markets are subject to economic, regulatory, market sentiment and political risks. All investors should consider the risks that may impact their capital, before investing. The value of your investment may become worth more or less than at the time of the original investment. The Fund may experience a high volatility from time to time. | Concentration: Concentration of investments within securities, sectors or industries, or geographical regions may impact performance. | Credit: The value of a bond may decline, or the issuer/guarantor may fail to meet payment obligations. Typically lower-rated bonds carry a greater degree of credit risk than higher-rated bonds. | Currency: The value of the Fund may be affected by changes in currency exchange rates. Unhedged currency risk may subject the Fund to significant volatility. | Emerging Markets: Emerging markets may be subject to custodial and political risks, and volatility. Investment in foreign currency entails exchange risks. | Hedging: Any hedging strategy using derivatives may not achieve a perfect hedge. | Interest Rates: The value of bonds tends to decline as interest rates rise. The change in value is greater for longer term than shorter term bonds. | Leverage: The use of leverage can provide more market exposure than the money paid or deposited when the transaction is entered into. Losses may therefore exceed the original amount invested. | Sustainability: An environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment.

 

Please refer to the prospectus and KIID / KID for additional information on the risks associated with investing.

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© Copyright 2024 Wellington Management Europe GmbH. All rights reserved. WELLINGTON MANAGEMENT FUNDS ® is a registered service mark of Wellington Group Holdings LLP.
Wellington Management Switzerland GmbH. Registered at the commercial register of the canton of Zurich with number CH-020.4.050.857-7
For professional investors and intermediaries only. This content is not suitable for a retail audience.

In Switzerland, the Fund offering documents can be obtained from the local Representative and Paying Agent, BNP Paribas Securities Services, Selnaustrasse 16, 8002 Zurich, Switzerland. The Prospectuses are available in English, French and Swiss French.

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