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While 77 per cent of net inflows went to equity funds versus just 18 per cent in fixed-income funds, Ian Tam, director of investment research at Morningstar Canada, says the announcement of Canada’s“Once the federal government issues a green bond, that’s kind of a signal to the market and lends support to the idea,” he says.
Demand for sustainable debt products has been enormous. The federal government’s first green bond issuance ended up attracting more than $11-billion in orders despite planning to raise just $5-billion. Globally, Moody’s expects aTransparency and knowledge issues Recent guidance from the Canadian Securities Administrators on a proposal for issuers to start disclosing climate-related risks is also likely to make itto recommend fixed income products to clients looking for more sustainable investing options, according to Morningstar’s Mr. Tam.
As the new know-your-client guidance becomes a best practice, Ms. Fletcher thinks we will start to see more advisors incorporating ESG factors and personal values into portfolio choices and decisions.In terms of how large a proportion of fixed income holdings could be moved into sustainability-focused products, Nesbitt Burns’ Mr. Mohammed says the funds have “similar credit and risk exposure” to more traditional debt products and can be considered as a replacement.
Mr. Tam takes it a step further, noting that the so-called green premium is not always there. Multiplehave found that as demand for sustainable investment options grows, the premium investors are expected to pay for those products falls.