Rathbones Ethical Bond Fund manager, Noelle Cazalis, tells Business Insider the strategy behind her 95th percentile returns.
The European Central Bank, under the supervision of its president, Christine Lagarde, has led from the front with green bond buying programs and the issuance of social bonds – known as SURE bonds. This year, even emerging-market countries such as Egypt have issued a green bond. "We've outperformed the sector with a lower level of volatility. We are one of the funds that has – over five-years – the highest Sharpe ratio in the sector," Cazalis said.
This doesn't diminish the ethical quality of the fund's investments, but it does create a strong investment pitch for the team to apply its process of exclusion, eliminating bonds that don't meet Rathbones' standards.As you would expect, the fund doesn't invest in any company that may have "exposure to animal testing, tobacco, alcohol, pornography, high-impact activity," Cazalis said, and once you have that, "you get your investment universe.
But, for Cazalis, the fund's ethical standards make for better investments generally. Having joined Rathbones as a credit analyst, the ESG process "absolutely makes sense." When Cazalis first joined in 2011, Britain was in the throes of an austerity regime, meaning that grants for social housing associations were being cut. Therefore, associations "had to find new sources of finance and a lot of them turned to the bond market," she added.
TaimoorK