Bond investors are grappling with the challenge of balancing fiduciary responsibilities with their commitment to sustainability. Could following a decarbonization glidepath, or reinvesting cash flows to direct bond portfolios toward a climate target, help? 

The past decade's market turbulence, rising inflation and fluctuating rates, has emphasized the importance of high-quality firms. This update to earlier research examines the quality factor’s role in navigating an ever-changing landscape. 

Single-factor portfolios seek high exposure to a target factor and limited exposure to non-target ones. We assess the impact that common portfolio weighting schemes have on these exposures, as well as on portfolio efficiency, concentration and investability.

How to define a factor? It’s a challenge for asset owners and wealth managers in evaluating how well factor products meet investment objectives. We found an improved and more robust measure can be formed by combining multiple descriptors.