Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Sustainable investing has been around for years in equity markets, but the practice is much newer within the fixed income landscape.
Since 2015, sustainable fixed income exchange traded funds (ETFs) have grown dramatically.
Growth in global assets under management of fixed income ETFs
Indexed, Jan 2015 = 100%
Greater resiliency
Fixed income investors face numerous risks, which have recently included inflation and geopolitical conflicts. Evidence shows that sustainable fixed income indexes have remained resilient during "risk off" periods when investors want to reduce risk.
Risk: Two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds.
Risk: Credit risk refers to the possibility that the issuer of the bond will not be able to repay the principal and make interest payments.
Improved sustainability profile
Fixed income ETFs allow investors to incorporate sustainability into existing portfolios and build new portfolios with specific sustainable objectives. For example, an investor could replace their investment
grade bond fund with a sustainable option.
The sustainable option has a much lower carbon emissions intensity, and a higher/better ESG score.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This is for illustrative and informational purposes and is subject to change. It has not been approved by any regulatory authority or securities regulator.
The environmental, social and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
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