This article is sponsored by T Rowe Price
There’s been a flock of activity among ESG portfolios this year, with plenty of movement in the corporate bond space catching our eye.
We tracked 13 transactions involving the DFMs we cover, five of those were buying a corporate bond fund for their ethical portfolios and eight were sales.
The two most popular choices for allocators remain Rathbone Ethical Bond and CT UK Social Bond, held by six and seven DFMs respectively.
Only one allocator has offloaded its CT UK Social Bond stake this year.
At first glance this DFM’s impatience seems justified: it has lost 2.8 per cent over three years, but that can be seen with the context of the headwinds faced by fixed income funds in that time
Bryn Jones Rathbones’ product has also struggled, losing 11 per cent over three years, this seems not to have deterred allocators, the fund saw one additional buyer jump onboard this year.
As previously mentioned, the Rathbones fund is also one of the most widely-held corporate bond funds among portfolio managers without an ESG mandate. More recent performance has been boosted by it being underweight duration, a call which has been vindicated of late, and we recently caught up with Jones, who confirmed he is now adding duration to the portfolio.
The Rathbones fund also has a hefty track record dating back to 2002.
The most telling trend we spotted in the database was the shift by managers away from actively managed ESG bond funds and into passive ones.
Just two DFMs bought into active funds in 2023, while a remarkable seven firms sold them off. In the passive sphere, however, the sentiment was far more buoyant, with three buys and just one sale so far this year.
Joseph Wilkins is a freelance journalist writing for Asset Allocator
