Insights

In the drive for ESG investing, a gap has arisen between corporate bond and securitization markets. We see this as an opportunity to blaze new trails and influence better outcomes for investors, the environment and society.

Our experts, William Theriault, CFA, Senior Client Portfolio Manager, Equity, and James Dorment, CFA, Head of Large Cap Fundamental Research, discuss the growth/value cycle.

Russia’s energy tentacles, intertwined throughout Europe’s power network, may prove difficult to excise.

In the wake of Russia’s invasion, social factors such as energy supply security, consumer protection and responsible sourcing demonstrate the importance of an inclusionary ESG approach.

The U.S. Federal Reserve met expectations and increased interest rates by 25 basis points.

Should the Russia-Ukraine conflict persist, it would lead to further tightening of financial conditions but is unlikely to deter the Federal Reserve from a 25 basis point interest rate hike in March. Tighter conditions will slow economic growth at the margins and constrain financial markets over the short term, but not over the longer term.

While it might seem better to focus on current so-called ESG leaders, we believe there is untapped value in the underappreciated ESG improvers.

The devastating events that continue to unfold in the conflict between Ukraine and Russia have led to steep price declines in both countries’ financial markets.

• Economic recovery likely undeterred: Rising energy prices add risk to Europe’s recovery but are unlikely to derail the global economic recovery.
• Expect further equity volatility: We see the strongest impacts in commodities, energy and financials, but focus should shift quickly to interest rates and supply-chain resolution.
• Seeing value amid spread widening: We believe the impact of Russia’s actions on fixed income markets has largely played out, and any further widening in credit spreads could present opportunities.

The market’s expectations for curve flattening may be excessive, as the timing of rate hikes and the aggressiveness of the Federal Reserve are still open to debate.