All insights

Creating a truly sustainable bond fund is no mean feat. Unlike the listed equity universe, where ESG data is more readily available, it is often sorely lacking in the fixed income space. At the same time, the problem for fixed income managers is exacerbated by the complexity of a bond’s structure, consisting of multiple parts which must all be individually assessed.

Fixed income investors are in "pole position to push for change" when it comes to ESG

We have a high opinion of Kensington as a mortgage lender and when we score it for ESG as part of our investment analysis it performs very well even without this latest Green initiative, but we do feel it can stretch further.

All told, while we think relative value in WBS can be attractive, we believe the trend of refinancing in the bond market is only going to continue in the coming years, though it will be gradual.

With all of the recent data pointing to higher inflation expectations and the Fed expected to maintain a transitory interpretation, we will be focusing our attention on comments from the various regional Fed presidents on conditions that could prompt a tapering move at some point in the future.

We believe UK government bonds are ultimately most vulnerable to a rise in inflation, and the 10-year Gilt currently trading at 0.73% does not come close to compensating for this.