Styles of Responsible Investing: Attributes and performance of different RI fund varieties
How responsible investing funds differ in their portfolio construction approaches, revealing divergent green transition approaches and performance outcomes.
For the last 20y, the correlation between stock and bond returns has been negative, enabling CIOs to increase stock allocations, with bonds acting as a hedge, while still satisfying a given risk budget. However, stock-bond correlation is not immutable. The correlation was persistently positive from the late-1960s until the late-1990s, after having been negative in the 15y before that (Figure 1). A shift to positive stock-bond correlation affects the tradeoff between portfolio expected return and risk, likely altering a CIO’s asset allocation decision. What could lead to such a shift in stock-bond correlation?
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How responsible investing funds differ in their portfolio construction approaches, revealing divergent green transition approaches and performance outcomes.
The technology sector continued to play a starring role in powering the S&P 500 to new record highs this week.
US stock-bond correlation has shifted from negative to positive, a change that has also occurred across the developed market.