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Sustainable Debt Fund Growth Beats Equities After Virus Boost

  • Covid-19 fuels demand for sustainable equity, debt investment
  • Debt funds can be easier to track when it comes to ESG aims
Construction At The Avangrid Renewables La Joya Wind Farm
Photographer: Cate Dingley/Bloomberg

Funds that buy debt designed to help society grew at a faster pace in the first half of the year than those that buy sustainable equity.

The Covid-19 pandemic has fueled demand for funds globally that invest in any sort of asset that can make the world better and fight the disease, according to Hortense Bioy, director of sustainability research for Europe, the Middle East, Africa, and Asia Pacific at Morningstar. Many investors are drawn to fixed-income funds in particular because bonds and loans can be clearly tied to projects with environmental, social or governance aims, while equity can be harder to track that way, she said.