Trustnet Magazine 65 September 2020 | Page 30

Your portfolio 30 / 31 Sustainable equity funds have excelled from a total return point of view recently, but what are the options for fixed income investors? Rebecca Jones finds out Desperately seeking sustainable income Income, as most investors are painfully aware, is hard to come by these days. This is particularly true for anyone interested in sustainable investment: a sector where most companies are focused on growth, rather than income, making equity income a rarity. The sustainable and green bond sectors, however, are growing apace, with the Covid-19 pandemic helping to spur issuance of these securities to an all-time high of £75.5bn in the second quarter of 2020, according to the latest report from Moody’s. The sustainable bond sector has been one of the biggest surprise beneficiaries of the current crisis, with corporates, government bodies and NGOs alike all scrambling to raise debt to finance social-support packages. Simon Bond, manager of the Threadneedle UK Social Bond fund, says: “In March, we saw a flurry of issuance from organisations like the Nordic Investment Bank, the Austrian government, the French employment agency and others supporting areas like SME lending. The speed of the Covid response was surprising.” What’s in a name? During this period, Bond says yield spreads widened significantly as issuers flooded the market, a fact reflected in his own fund’s average yield, which spiked 100bps to 2.5 per cent in March. Aitken Ross, manager of the Liontrust Sustainable Future Corporate Bond fund, concurs: “The market has been quite challenging over the past TRUSTNET