Some sovereign-bond investors seeking to support climate mitigation might be interested in the idea of increasing their exposure to issuers with lower carbon emissions. Would this have been a good approach? 

Bond investors evaluating their decarbonization targets may want to consider different scenarios for projected carbon emissions of companies in their portfolios. We assessed three scenarios’ impact on portfolios aiming for different decarbonization levels by 2030. 

We consider a scenario in which corporate-bond issuers meet their projected levels of emissions reductions — and what it could mean for the fixed-income portfolios of investors with a climate mandate. 

Sustainable investing often necessitates reducing portfolio emissions. But adding emission-reduction targets requires a careful navigation of market complexities and risk considerations alongside sustainability objectives. Could using a climate glidepath help? 

Real yields in many countries have surged to their highest levels in a decade. But while high real yields might offer potential opportunities for investors, it is important to recognize the risks. 

Eclipsing equity and bond yields and high crowding may be signs of a vulnerable equity market. We compare equity/bond yield spreads in the major regional markets along with crowding in sectors and regions.  

A bond portfolio generates cash flows over time that include coupon payments and the face value of matured bonds, assuming no defaults. With controlled and systematic reinvestment of this cash flow, investors can gradually decarbonize their portfolios on a glidepath.

The relationship between U.S. bonds and equities has seen a number of shifts in recent years, but with inflation pressures easing, could bonds regain their reputation as portfolio diversifiers? 

Investors face “sticky” inflation, equity-market concentration and expectations that U.S. interest rates may be higher for longer. We examine recent global-markets trends to help as asset allocators and portfolio managers determine their next move. 

The broad equity market remained relatively resilient in the wake of recent bank failures, but how might it spill over in the coming months? We present three scenarios for potential risks and opportunities from the recent banking-industry upheaval. 

Bond investors looking to reduce their portfolios’ carbon footprint may decide to shift capital from high to low emitters. Did a decarbonizing approach that preserves sector exposures significantly change the main portfolio risk characteristics? 

Use our interactive chart to highlight different time periods and see when bonds provided stronger (or weaker) diversification against losses in the equity market.

The sharp rise in inflation over the past year and a half, combined with growing concern over the U.S. economy’s strength, may prompt investors to rethink basic assumptions underlying portfolios comprised of bonds, equities and other asset classes.

Market volatility poses major challenges to investors trying to track bond indexes while also keeping transaction costs low. Can managers of funds tracking bond indexes balance transaction costs and tracking error?

Use our interactive plot to compare real-time equity-factors data on two volatile trading days.

Investors increasingly focus on building greener portfolios. Some might expect bonds to be less exposed to climate-transition risk compared to equities, due to the seniority of bonds in the capital structure. But does that logic hold at the portfolio level?

The transition to a low-carbon economy could significantly redirect the flow of investments toward greener companies and technologies that limit carbon emissions. We consider the potential risk — and opportunity — for bond investors.

Global investors’ interest in Chinese government bonds has risen, as these bonds offer higher yields than developed-market sovereign debt. For investors thinking about adding Chinese bonds to their portfolios, what could be the impact on portfolio risk?

Aggressive actions by central banks and soaring government budget deficits have raised concerns among some investors that inflation may significantly rise. We examine whether an inflation hedge was worth the cost over the past 13 years.

Investors may employ leverage with lower-risk asset classes such as bonds to seek higher risk and returns. We assessed the effects of leverage on the returns of three hypothetical multi-asset-class portfolios during the COVID-19 crisis.

Our latest COVID-19 stress test looks at four potential financial-market outcomes ranging from a swift V-shaped recovery to a pessimistic L-shaped scenario, in which outbreaks recur and lockdowns return well into 2021.

While newspaper headlines are focused on volatile stock markets stemming from the COVID-19 pandemic, credit markets are not immune. Our latest stress test asks, “What would it mean for portfolios if losses reached 2008 levels?”

After the coronavirus spread to multiple continents, markets recorded the worst week since the crisis. How much further could markets drop if epidemic turns into pandemic? Our stress test indicates room for further losses.

Asset allocators may consider lengthening the duration of their bond portfolios to prepare for a potential recession in the U.S. But could duration extension push risk above target thresholds? Maybe not.