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De-Risking? Mind the Carbon!

Shifting a portfolio from stocks to bonds reduces investment risk, but it can also increase the portfolio’s carbon footprint. Read about a carbon-aware approach to reduce that impact and benefit the portfolio overall.

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Key takeaways

  • Bond investors can start positioning for the eventual normalization of the yield curve by extending duration and anticipating a steepening curve.
  • Income remains the primary driver of returns in fixed income. Maximizing income per unit of risk can help generate efficient expected returns.
  • Slower expected economic growth suggests that a higher-quality bias should persist as monetary policy remains restrictive and fiscal support appears unlikely anytime soon.
  • A combination of healthy fundamentals and strong technicals should support municipal bonds and provide a buffer against market volatility.
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