How to Build a Sustainable Bond Portfolio
‘Good’ bonds are hard to find, so Wall Street is getting inventive.
Wall Street’s do-good investment boom is finally taking notice of the credit markets. Sustainable investment assets grew 37 percent last year, according to Bloomberg data, but the majority of those funds focus on stocks. That’s leading to some awkward conversations on Wall Street, as wealthy investors and foundations increasingly want to align their entire portfolios with their social mission but are finding few opportunities to do so in fixed income.
“Most of the people who are interested in incorporating ESG are interested in doing so throughout their portfolio,” says Rui de Figueiredo, co-head and chief investment officer of the Solutions and Multi-Asset Group at Morgan Stanley Investment Management. Yet, with a dearth of available fixed-income products categorized as environmental, social, and governance, those investors haven’t looked at it much. “But that creates more demand on the part of asset managers to create those opportunities,” he says.