Among the advisors surveyed, the majority used equity assets as the prime investment vehicle for attaining ESG goals. Meanwhile, fixed-income assets were less utilized.
- Actively managed equity mutual funds: 44%
- Individual stocks: 35%
- Equity ETFs: 31%
- Fixed income actively managed mutual funds 30%
- Bonds: 29%
- Fixed income ETFs: 22%
However, 58 percent of those advisors with three to nine years of experience shared the notion that too many equity ESG options exist and not enough fixed income ESG options were available to present to more conservative investors. On the other hand, only 34 percent of advisors with over 10 years of experience agreed–a clear generational dichotomy in terms of investment perspectives.
“Advisors are looking for options that best match their clients’ risk tolerance,” said Ms. Herrle. “Equity ESG funds may have too much risk for some conservative clients. Advisors are finding that social impact bonds — which do carry credit risk but also the benefits of income predictability, return of principal at maturity and declining interest rate risk as the maturity date approaches — can be utilized as part of a conservative income portfolio strategy.”
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