By Aled Jones, head of sustainable investment, Europe

The latest Gates Foundation annual assessment of global progress toward the UN Sustainable Development Goals (SDGs) is less than encouraging. According to Bill Gates, the goals are still far out of reach, as he lamented the world is “nowhere near improving fast enough” to meet them. The same could be said for investors—when it comes to addressing SDGs in their investments, there’s still much progress to be made.

One can hardly blame investors for lack of good intention. Adoption of ESG strategies has been on the rise over the past decade, and many investors who are already applying ESG considerations still believe they could be making a greater impact through their investments.

The SDGs might appear the logical next step for these investors looking to take ESG to the next level, as they lay out 17 global goals spanning environmental, social and development issues—representing the closest we have to a...

BBB-rated Canadian corporate bonds represent an increasingly larger proportion of the Canadian corporate bond market, according to analysis from global multi-asset index provider FTSE Russell.

As of January 31, the FTSE Canada 1-10 Year Corporate BBB Bond Index had 326 issuers representing approximately $141.1 million (CAD) in market cap. This translates to 29% of the total market cap of the FTSE Canada All Corporate Bond Index as compared to 287 issuers and 42% market cap percentage for the FTSE Canada 1-10 Year Corporate A+ Bond Index. This picture looked much different on January 30, 2004, when just 105 BBB-rated Canada corporate bonds represented 14% of the market cap of the FTSE Canada All Corporate Bond Index and 304 A+ issuers represented 66% of the FTSE Canada All Corporate Bond Index.

Marina Mets – head of Americas fixed income and multi-asset index product management, FTSE Russell:

“The past few decades have seen an increase in the...

By Philip Lawlor, managing director, head of global markets research

Assessing how damaging the coronavirus epidemic will ultimately be for the global economy remains challenging.

The viral outbreak has cast a shadow over global growth expectations, which had been improving in recent months thanks to coordinated central-bank stimulus efforts and the US-China trade truce. Notably, leading indicators, particularly in manufacturing, had begun showing tentative signs of recovery.

This fledgling rebound has been mirrored in consensus 12-month forward GDP estimates, which had also appeared to be stabilizing after the sharp deterioration from early 2018 peaks.

 

Yield curves resume flattening

Bond markets have largely interpreted the outbreak as a disinflationary shock: With the sharp decline in China-dependent oil and copper prices, breakeven inflation expectations have given back much of their Q4 gains, resuming the downtrend...

By Philip Lawlor, managing director, head of global markets research

Assessing how damaging the coronavirus epidemic will ultimately be for the global economy remains challenging.

The viral outbreak has cast a shadow over global growth expectations, which had been improving in recent months thanks to coordinated central-bank stimulus efforts and the US-China trade truce. Notably, leading indicators, particularly in manufacturing, had begun showing tentative signs of recovery.

This fledgling rebound has been mirrored in consensus 12-month forward GDP estimates, which had also appeared to be stabilizing after the sharp deterioration from early 2018 peaks.

 

Yield curves resume flattening

Bond markets have largely interpreted the outbreak as a disinflationary shock: With the sharp decline in China-dependent oil and copper prices, breakeven inflation expectations have given back much of their Q4 gains, resuming the downtrend...

By Philip Lawlor, managing director, head of global markets research

Assessing how damaging the coronavirus epidemic will ultimately be for the global economy remains challenging.

The viral outbreak has cast a shadow over global growth expectations, which had been improving in recent months thanks to coordinated central-bank stimulus efforts and the US-China trade truce. Notably, leading indicators, particularly in manufacturing, had begun showing tentative signs of recovery.

This fledgling rebound has been mirrored in consensus 12-month forward GDP estimates, which had also appeared to be stabilizing after the sharp deterioration from early 2018 peaks.

 

Yield curves resume flattening

Bond markets have largely interpreted the outbreak as a disinflationary shock: With the sharp decline in China-dependent oil and copper prices, breakeven inflation expectations have given back much of their Q4 gains, resuming the downtrend...

Integrating climate change issues into listed real estate portfolios Fong Yee Chan (FTSE Russell), Isabelle Bourcier (BNP Paribas Asset Management) [[ webcastStartDate * 1000 | amDateFormat: 'MMM D YYYY h:mm a' ]] 75 mins

The focus on markets in the last few weeks has been on risks posed to the global supply chain emanating from the recent outbreak of the coronavirus in China. As a result, there is a building awareness that it is catching the global economy at a vulnerable stage, injecting uncertainty into the near-term outlook for the global economy.

Join Philip Lawlor, managing director of Global Market Research at FTSE Russell, to hear about some of his observations on our Equity Market Drivers Report.

By Lee Clements, director, SRI Research

Europe is a leader in the global efforts to mitigate climate change. Its political classes have lobbied for more ambitious global targets, set strong national targets and are marshaling banks and investors to support climate finance. This can be seen from the relative performance of Europe vs. the rest of the world in cutting carbon emissions and the amount of further efforts to achieve a global warming compliant level of 2° C degrees.

Annualized cuts in territorial carbon emissions until 2050 required to limit global warming to 2° C degrees vs actual 5 years carbon emissions CAGR

Source: FTSE Russell, emissions as at 2016. Bubble size indicates absolute size of emissions. Countries shown are members of the FTSE World Government Bond Index (EGBI), those in green are members of the FTSE EMU Government Bond Index (EGBI), in grey is the aggregation of members of the WGBI and the EGBI.

However, not all...

Join FTSE Russell’s market specialists for a 30-minute webinar, during which they will share their analysis of global equity and bond markets, and review current market drivers, such as valuation, earnings and financial conditions, all within the context of the coronavirus pandemic.

Key discussion points:

Newly created role will further strengthen FTSE Russell’s global sustainable investment team Helena brings over 10 years expertise in ESG and sustainable investment Market participants in Asia Pacific are increasingly looking to incorporate sustainable investment approaches into their investment strategies FTSE Russell has 20+ years’ experience in supporting clients around sustainable finance and investment

By Alexandros Severis, Smart Beta Product Manager

Factor investing is no longer a niche strategy frequently applied by the sophisticated few. These strategies’ potential for improved risk-adjusted returns has led to successful long-term relationships with pension funds, and a growing demand from retail clients.

A common issue is that investors frequently feel that they lose control or are led astray by the promises of factor strategies relative to actual outcome. The problem: unintended factor exposures created as a result of index construction and factor correlations.

For example, let’s consider a multi-factor portfolio constructed using a traditional tilt framework with the aim of achieving specific fixed exposures to the Value and Quality factors. The chart below (Chart 1) shows that, despite incorporating Value and Quality tilts and ignoring Momentum, factor correlation unintendedly led to an unwanted negative exposure to the Momentum factor (Chart 2)....

Webinar: Climate risk analytics for sovereign debt markets Katie Prideaux, Analytics Product Specialist,Yield Book, Helene Bakhtiar, Sustainable Investment Product, Beyond Ratings [[ webcastStartDate * 1000 | amDateFormat: 'MMM D YYYY h:mm a' ]] 60 mins ###

Climate risks are likely to affect the long-term investment horizon of sovereign bond investors, well beyond the general short-term perspective of financial investments. Alongside traditional fundamental sources of relative value and risk, such as the perceived health of government finances, inflation expectations and the future path of interest rates, sovereign bond investors should increasingly consider the material effects of climate change.

In this paper, we introduce what could be the impact of climate change for sovereigns via the changes in fiscal policy, social contract and political stability, in both advanced and emerging economies. First, we discuss the characterization of climate risks, which can be...

The new FTSE Target Exposure Indexes are a suite of benchmarks designed to focus on specific characteristics— such as factor, climate and ESG exposures—while minimizing all off-target, consequential exposures, to deliver a “near pure” index. Target exposures are completely flexible and can be combined to cater to specific client objectives and investment outcomes.

###

Factor strategies differ significantly in terms of portfolio construction. There is much debate regarding the pros and cons of alternative construction approaches. A vigorous debate has unfurled over the best way to combine factors into a single portfolio, with some practitioners preferring the top-down approach and others favoring a bottom-up "integrated" approach.

In this paper, we:

###

By Alexandros Severis, Smart Beta Product Manager

Factor investing is no longer a niche strategy frequently applied by the sophisticated few. These strategies’ potential for improved risk-adjusted...

By Alexandros Severis, Smart Beta Product Manager

Factor investing is no longer a niche strategy frequently applied by the sophisticated few. These strategies’ potential for improved risk-adjusted returns has led to successful long-term relationships with pension funds, and a growing demand from retail clients.

A common issue is that investors frequently feel that they lose control or are led astray by the promises of factor strategies relative to actual outcome. The problem: unintended factor exposures created as a result of index construction and factor correlations.

For example, let’s consider a multi-factor portfolio constructed using a traditional tilt framework with the aim of achieving specific fixed exposures to the Value and Quality factors. The chart below (Chart 1) shows that, despite incorporating Value and Quality tilts and ignoring Momentum, factor correlation unintendedly led to an unwanted negative exposure to the Momentum factor (Chart 2)....

By Lee Clements, director, SRI Research

Europe is a leader in the global efforts to mitigate climate change. Its political classes have lobbied for more ambitious global targets, set strong national targets and are marshaling banks and investors to support climate finance. This can be seen from the relative performance of Europe vs. the rest of the world in cutting carbon emissions and the amount of further efforts to achieve a global warming compliant level of 2° C degrees.

Annualized cuts in territorial carbon emissions until 2050 required to limit global warming to 2° C degrees vs actual 5 years carbon emissions CAGR

Source: FTSE Russell, emissions as at 2016. Bubble size indicates absolute size of emissions. Countries shown are members of the FTSE World Government Bond Index (EGBI), those in green are members of the FTSE EMU Government Bond Index (EGBI), in grey is the aggregation of members of the WGBI and the EGBI.

However, not all...

Join FTSE Russell’s market specialists for a 30-minute webinar, during which they will share their analysis of global equity and bond markets, and review current market drivers, such as valuation, earnings and financial conditions, all within the context of the coronavirus pandemic.

Key discussion points:

The new FTSE Target Exposure Indexes are a suite of benchmarks designed to focus on specific characteristics— such as factor, climate and ESG exposures—while minimizing all off-target, consequential exposures, to deliver a “near pure” index. Target exposures are completely flexible and can be combined to cater to specific client objectives and investment outcomes.

###

Factor strategies differ significantly in terms of portfolio construction. There is much debate regarding the pros and cons of alternative construction approaches. A vigorous debate has unfurled over the best way to combine factors into a single portfolio, with some practitioners preferring the top-down approach and others favoring a bottom-up "integrated" approach.

In this paper, we:

###

By Alexandros Severis, Smart Beta Product Manager

Factor investing is no longer a niche strategy frequently applied by the sophisticated few. These strategies’ potential for improved risk-adjusted...

By Lee Clements, director, SRI Research

Europe is a leader in the global efforts to mitigate climate change. Its political classes have lobbied for more ambitious global targets, set strong national targets and are marshaling banks and investors to support climate finance. This can be seen from the relative performance of Europe vs. the rest of the world in cutting carbon emissions and the amount of further efforts to achieve a global warming compliant level of 2° C degrees.

Annualized cuts in territorial carbon emissions until 2050 required to limit global warming to 2° C degrees vs actual 5 years carbon emissions CAGR

Source: FTSE Russell, emissions as at 2016. Bubble size indicates absolute size of emissions. Countries shown are members of the FTSE World Government Bond Index (EGBI), those in green are members of the FTSE EMU Government Bond Index (EGBI), in grey is the aggregation of members of the WGBI and the EGBI.

However, not all...

Legal and General Investment Management (LGIM) has already employed the new Target Exposure methodology on behalf of a UK-based defined benefit pension fund, moving the scheme's entire equity allocation to a multi-factor strategy to limit drawdowns, while applying specific risk parameters and controls.

Andrew Dougan, director, research and analytics at FTSE Russell, said: "As assets tracking single and multi-factor indices continue to grow rapidly, so too has the appetite for benchmarks designed to precisely meet specific investment objectives through efficient factor allocation over time.

"FTSE Russell's new Target Exposure indexes, now available on some of our most widely followed flagship products like the FTSE All-World, is the natural evolution of our factor framework and tilt methodology, increasing choice for customers."

Dr Fadi Zaher, head of index research and development at LGIM, added: "The Target Exposure indexes are an innovative solution to...

Webinar: Climate risk analytics for sovereign debt markets Katie Prideaux, Analytics Product Specialist,Yield Book, Helene Bakhtiar, Sustainable Investment Product, Beyond Ratings [[ webcastStartDate * 1000 | amDateFormat: 'MMM D YYYY h:mm a' ]] 60 mins ###

Climate risks are likely to affect the long-term investment horizon of sovereign bond investors, well beyond the general short-term perspective of financial investments. Alongside traditional fundamental sources of relative value and risk, such as the perceived health of government finances, inflation expectations and the future path of interest rates, sovereign bond investors should increasingly consider the material effects of climate change.

In this paper, we introduce what could be the impact of climate change for sovereigns via the changes in fiscal policy, social contract and political stability, in both advanced and emerging economies. First, we discuss the characterization of climate risks, which can be...