PLANADVISER - November/December 2018 - 15

ESG Opportunities via Fixed Income
More than half of asset managers now apply 'ESG' beyond equities
RBC Global Asset Management recently
published its third annual Responsible
Investing Survey, and My-Linh Ngo,
ESG [environmental, social and governance]
investment specialist for the
firm's BlueBay Asset Management division,
in London, offered PLANADVISER
her take on the results.
At a high level, the survey results
suggest that U.S. institutional investors
are rapidly warming to the utilization
of ESG factors when building out
their portfolios-and many are already
applying their own conclusions about
the strategy. Notably, the percentage of
these investors that reject ESG considerations
outright
shrank year over
year, from 51% to 34% this year.
As Ngo pointed out, equities have
long been the primary focus of ESG
analysis and investing, but these days
such analysis is quickly moving beyond
equities. Thirty percent of respondents
in the U.S. said it is important to incorporate
ESG into fixed-income considerations,
she said. Asked directly whether
they incorporate ESG into fixed-income
management, 52% of U.S. investors that
already use ESG said, yes.
" Our company has a core belief that
ESG considerations are investment
additives, not a hindrance to performance, "
Ngo said. " Thinking about ESG
helps us generate a more holistic and
informed view of how companies are
performing or are likely to perform
in the future. So, we are applying an
ESG risk overlay across all of the fixedincome
assets we manage. It is not
something we limit to niche funds. "
The specific approaches BlueBay
applies will vary across different products
and geographies, but ESG risk
overlays " come standard with every
fund and investment product, " she
said. " We do it this way because we
see ESG as something that can be quite
beneficial in terms of measuring and
addressing downside risk, especially
on the fixed-income side. "
According to Ngo, providers these
days are taking a much more sophisticated
approach to ESG than just
running simplistic negative portfolio
screens to avoid bad apples.
" Today, we are conducting sophisticated
analysis on the investment materiality
of key ESG factors, and we are
doing this in a rational way that looks
across the entire institutional portTALKING
POINTS
The Future Can Wait
Nearly 4 in 10 young adults ages 22
through 35 list saving for retirement after
other major financial priorities.
Source: Navient, " Money Under 35 "
Saving for a Rainy Day
Seven in 10 employees say they
would participate in an employer-based
rainy-day savings program.
Source: AARP Public Policy Institute
'Borrowing' Worry
Twenty-five percent of 401(k) participants
have an outstanding loan against their
account-maybe why 75% of employers
say they worry about the level of
participant borrowing in their 401(k) plan.
Source: Alight Solutions
planadviser.com November-December 2018 | 15
folio, " she said. " This work is not about
running a bunch of negative screens,
but instead it is about being scientific
about how you build portfolios and the
risks you take.
" In absolute terms, " she said, in sum,
" both ESG equities and fixed income are
not quite mainstream yet. [But] they are
getting there. " -John Manganaro
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PLANADVISER - November/December 2018

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