Germany-based Union Investment has unveiled a Luxemburg-domiciled global convertible bond fund for institutional investors.

The new UniInstitutional Global Convertibles Sustainable will allow investors to benefit from equity market performance at a lower level of downside risk.

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The fund, which seeks exposure to upside equity risk in line with ethical, social and eco-friendly criteria, will also offer exposure in high yield convertible bonds in order to the increase the earnings potential of the portfolio.

The fund will be managed by Sven Hölzer and will invest in convertibles as well as warrant-linked bonds, fixed and floating rate paper, money market instruments and derivatives.

Additionally, the fund will invest in companies that meet defined sustainability criteria including International Labour Organization standards, and do not violate any human rights.

However, investments which are not denominated in euro will largely be hedged against currency risk.

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Hölzer, fund manager, said: "The corporate-bond characteristics of convertibles provide investors with consistent income in the form of coupon payments, as well as a fixed minimum redemption amount. At the same time, the embedded equity call options offer unlimited participation in equity returns. This makes it possible to generate equity-like earnings with less downside risk."