Responsible investing in focus: Emerging market bonds

Emerging market bonds offer compelling insights into the impact of ESG investment objectives on returns

May 1, 2018 | Julie Salsbery and Shane Gallagher

Invesco Fixed Income believes ESG-focused fundamental analysis can improve the assessment of emerging market sovereign risk. However, we find that identifying effective ESG indicators is critical when it comes to anticipating market performance.

We also find that, for emerging market sovereign bonds, responsible investing (RI) has historically resulted in comparable returns, or even outperformance. There is also a strong case in favor of active rather than passive investing. Indeed, there appears to be no place for passive investing when it comes to RI in emerging market bonds

Furthermore, two case studies show that RI has the potential to generate positive outcomes for future generations. We conclude by summarizing Invesco Fixed Income’s own RI approach.

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