August 23, 2013 FA Magazine | Jerilyn Klein Bier
Fixed-Income Solution For Impact Investing
Part of the problem is that few bond portfolios are packaged or even assessed using impact criteria. In addition, credit ratings from Standard & Poor’s, Moody’s and Fitch Ratings fail to address social and environmental impacts that could affect future financial performance. For example, AA or A-rated bonds issued to a coal-burning power plant might not price in the risks of pollution or negative health outcomes.
But everything clicked when a mutual client introduced SNW Asset Management to HIP Investor Inc., a San Francisco-based firm that rates more than 4,000 companies globally for impact and advises on more than $120 million in assets. Initially, the firms partnered to rate 200 municipal bond issuers. That number has grown to 500 and keeps expanding. In early 2013, they began offering custom impact-rated bond portfolios.
As of August, the SNW HIP-rated bond portfolios totaled $70 million in assets. Eighty percent of that amount comprised tax-free municipal bonds, with the remainder split among government and corporate bonds (7.5 percent each) and taxable municipal bonds (5 percent).
Read the full article HERE.