Praxis Mutual Funds, a leading faith-based, socially responsible family of mutual funds from Everence Financial, celebrates the Praxis Impact Bond Fund (MIIAX) crossing both the 30-year mark and $1 billion in assets this year.
Praxis Investment team (from left to right): Jack Albaz, Benjamin Bailey, Chris Woods, Dale Snyder.
The Praxis portfolio management team builds a diversified, values-screened “core bond” portfolio that includes impact-oriented bonds. Fund holdings include a wide range of U.S. corporate debt securities, notes and bonds issued by agencies of the U.S. government, and mortgage-backed securities.
“Many more impact-oriented bonds are available now than 30 years ago, which has enabled us to increase their representation in the portfolio while remaining broadly diversified,” said Benjamin Bailey, CFA, Vice President of Investments and a Senior Fixed Income Investment Manager. “We continue to see interesting new issuances come to market and are highly optimistic about the role of impact bonds in a stewardship investing framework.”
Like its flagship bond fund, Praxis Mutual Funds was founded in 1994. Praxis helps individuals and institutions integrate their investments with their values through a stewardship investing approach. The inclusion of Impact bonds is one of seven distinct impact strategies that make up the Praxis ImpactX framework.
Bailey shared perspective on the history and focuses of the Praxis Impact Bond Fund:
What is the history of the Fund?
Benjamin Bailey: Originally called the Praxis Intermediate Income Fund, the fund launched in 1994 to give Mennonite and Anabaptist investors a way to invest in bonds consistent with their values. Praxis brought retail investors an approach to fixed income investing that religious institutions in these faith traditions had utilized for decades.
I joined the fund’s portfolio management team in the early 2000s, at the start of my investing career. In those years, we screened out issuers that didn’t meet our specific values criteria — so we were avoiding “the bad” — but we hadn’t yet envisioned a way in which we could really make a deep, positive impact in the world.
A watershed moment came in 2006 when we invested in the International Finance Facility for Immunization (IFFIm). Learning about this opportunity in vaccine bonds opened my eyes to the specific impact that investing in positive impact bonds can have in a fixed income portfolio.
The introduction of green bonds in the U.S. in 2009 and subsequent growth of the impact bond market has allowed Praxis to ramp up the percentage of the portfolio that is dedicated to positive impact bonds. By 2016, that percentage had grown to nearly a quarter. That’s when we changed the name to the Praxis Impact Bond Fund, wanting to make clear that our focus was on making a positive impact through this fund, to the degree the market made possible. Today, the percentage of impact bonds is even higher — about 36%. And we look forward to growing this percentage even further.
How does Praxis define “Positive impact bonds”?
Bailey: Positive impact bonds are bonds that make a specific positive impact to the climate and/or communities. A specific part of this market is in bonds called green bonds, social bonds and sustainability bonds. These have generally accepted guidelines from ICMA (International Capital Market Association) on what projects are acceptable in each of these categories and establish general expectations for future reporting and signoffs from management and auditors.
As investors, we want the bonds to have a level of rigor and depth to them in terms of impact, but we also don’t want to discourage potential issuers with too many firm regulations and rules. As committed impact bond investors, we often engage the issuers, encouraging them to take this opportunity seriously and pursue the highest standards that are feasible.
How can investors know that their investments are making a difference?
Bailey: There are many ways to make a difference with your financial resources — through charity or purposeful purchasing, for instance — but investing with your values in mind allows you to use the power of your investment portfolio to promote a better world. It is important to consider the full range of impact opportunities available, including positive impact bonds. Our annual Praxis Real Impact Report and Real Impact Quarterlies document seven different impact strategies, available across a range of fund types, that can help investors understand the impact of their investment dollars.
About Praxis Mutual Funds
Founded in 1994, Praxis Mutual Funds is a leading faith-based, socially responsible family of mutual funds designed to help investors integrate their finances with their values. Praxis is the mutual fund family of Everence Financial, a comprehensive faith-based financial services organization helping individuals, organizations and congregations. Click here to learn more or call 800-348-7468.