Green bond indices versus the overall market – what are the performance drivers?

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“Green bonds perform better than comparable bonds without a sustainability character.” This generalised thesis is heard time and again on the bond market and we have systematically investigated this statement. In doing so, we have gained interesting insights that both confirm and refute it. Due to structural differences between the two bond segments, it simply depends on the timing and the market phase.

We look at the structural differences between a green bond index and the overall market, and show in which market phases the respective index performs better or worse. The aim of this article is to give the reader a concise overview of the past and possible future performance drivers of green bonds.

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Felix Stern
Head of Fixed Income Euro Balanced