Fixed income drives new ESG focus (BNY Mellon)

Considering ESG issues in a bond context is a growing area of interest from investors, who are currently contending with a market that looks uncertain and increasingly volatile, say Newton head of fixed income Paul Brain and portfolio manager and sector analyst Scott Freedman.​

After a difficult year for fixed income investors across a range of assets, Brain believes government bond markets and selective emerging market investments could hold significant potential as credit markets tighten in 2019.


He anticipates that government debt levels as a percentage of GDP will continue to rise across most major economies and could ‘crowd out’ some other capital requirements. While overall market stress looks set to remain moderate this year, he also points to a potential rise in risk in credit markets.

“We think government bonds can do well and emerging market debt can do okay selectively this year but high yield and credit is where investors perhaps need to be cautious because company profits are reducing,” he says.


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