December 11, 2018 / Video
Influencing change: ESG investing & fixed income
Sponsored by PIMCO
As ESG factors are increasingly integrated into fixed income, PIMCO sees key opportunities.
Since 2004, when the United Nations Global Compact launched Environmental, Social and Governance (ESG) investing, equities have received the lion’s share of attention and engagement from investors and analysts. However, we believe that this is about to change, with fixed income at the forefront of the sustainable investing universe, ushering in what we call the “ESG New Normal”.
For those seeking to align financial goals with an ability to influence change, fixed income provides significant opportunities. The global fixed income market represents approximately $100trn, compared with $69trn for the global equity market¹, so sustainable investing in fixed income can have a major impact.
In many ways, the fixed income market is uniquely suited to both benefit from and provide finance for ESG-related efforts. Issuers often return to the bond market – unlike the stock market – when they refinance old debt or seek new funding. This gives bond investors a unique opportunity to identify risks, engage issuers and build relationships that can influence change.
PIMCO believes that incorporating ESG analysis into fixed income portfolios has the potential to deliver attractive long-term returns while also influencing positive societal change. It doesn’t need to be an “either/or” proposition.
Bond by Bond: Invested in positive change
Watch key members of PIMCO’s ESG team discuss why we believe integrating sustainable thinking with bond investing can positively influence portfolios – while also making the world a better place.
PIMCO has long believed that uncovering value for clients requires a focus on long-term factors. That’s why we’ve incorporated ESG considerations in our process and portfolios for many years.
Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by PIMCO will reflect the beliefs or values of any one particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and PIMCO is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. Past performance is not a guarantee or a reliable indicator of future results.
Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.
There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long term, especially during period of downturn in the market. Investors should consult their investment professional prior to making an investment decision.
This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2019, PIMCO.
PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.| PIMCO Asia Pte Ltd (8 Marina View, #30-01, Asia Square Tower 1, Singapore 018960, Registration No. 199804652K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services license and an exempt financial adviser. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised.| PIMCO Asia Limited (Suites 2201, 22nd Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong) is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance. PIMCO Asia Limited is registered as a cross-border discretionary investment manager with the Financial Supervisory Commission of Korea (Registration No. 08-02-307). The asset management services and investment products are not available to persons where provision of such services and products is unauthorized.
¹Source: PIMCO, Haver Analytics data as of 31 March 2018.