Strong ESG-related bond index returns in early part of August
Bloomberg Intelligence
This analysis is by Bloomberg Intelligence Senior Analyst Christopher Ratti. It appeared first on the Bloomberg Terminal.
ESG-related bond indexes that we monitor rose through the first two weeks of August, with the Bloomberg Global Aggregate Social Bond Index performing the best and the Bloomberg Global Sustainability Bond Index lagging behind. The MSCI thematic ESG indexes were also up, though less than the Global Aggregate Green Social Sustainability Bond (GSS) index.
Global ESG Bond Index returns turn positive for 2024
Global sustainable fixed-income indexes had negative returns for most of 2024. Yet after a strong start to August, all have turned positive as the spike in market volatility and increased expectations of interest-rate cuts in the US resulted in strong bond performance. The Bloomberg Global Aggregate Social Bond Index has outperformed with a 2.38% return from Aug. 1 through Aug. 14, followed by the Bloomberg Global Green Bond index with 2.20% and the Global Green Social Sustainability Bond index at 2.14%. The worst performer for the period was the Global Sustainability Bond index, returning 1.72%.
Global ESG Bond Index Performance
Green Social Sustainability Euro Index outpaces Euro Aggregate
Looking at the Green Social Sustainability bond indexes by the largest currencies, we see the euro-based index outperforming the comparable Pan-European Aggregate through the first two weeks of August. It returned 0.43% vs. the Pan-European Aggregate at 0.22% as the Euro GSS had slightly longer duration and longer duration performed better during the period. The GSS Dollar Bond index underperformed, with a 0.91% return vs. the US Aggregate, at 1.08%.
US and Euro ESG Bond Index Performance
MSCI Thematic ESG Bond Index performance
The MSCI family of ESG indexes was led by the Global Sustainability index returning 1.90% in the first two weeks of August. There was little dispersion among the other indexes, with only 9 bpsThe MSCI family of ESG indexes was led by the Global Sustainability index returning 1.90% in the first two weeks of August. There was little dispersion among the other indexes, with only 9 bps between the best and the worst. The Global Agg ESG Weighted index was second with 1.85%, followed by the Global SRI Index, at 1.82%. The lowest return of the four indexes came from the MSCI Global Catholic Values, with 1.81% between the best and the worst. The Global Agg ESG Weighted index was second with 1.85%, followed by the Global SRI Index, at 1.82%. The lowest return of the four indexes came from the MSCI Global Catholic Values, with 1.81%.
MSCI Thematic ESG Bond Index Performance
Periodic returns of Global GSS Bond Indexes
Almost all of the Bloomberg Green Social Sustainability bond indexes have positive returns across all periods.
Periodic Returns of Global GSS Bond Index
The data included in these materials are for illustrative purposes only. The BLOOMBERG TERMINAL service and Bloomberg data products (the “Services”) are owned and distributed by Bloomberg Finance L.P. (“BFLP”) except (i) in Argentina, Australia and certain jurisdictions in the Pacific Islands, Bermuda, China, India, Japan, Korea and New Zealand, where Bloomberg L.P. and its subsidiaries (“BLP”) distribute these products, and (ii) in Singapore and the jurisdictions serviced by Bloomberg’s Singapore office, where a subsidiary of BFLP distributes these products. BLP provides BFLP and its subsidiaries with global marketing and operational support and service. Certain features, functions, products and services are available only to sophisticated investors and only where permitted. BFLP, BLP and their affiliates do not guarantee the accuracy of prices or other information in the Services. Nothing in the Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment strategy or whether or not to “buy”, “sell” or “hold” an investment. Information available via the Services should not be considered as information sufficient upon which to base an investment decision. The following are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries: BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PROFESSIONAL, BLOOMBERG TERMINAL and BLOOMBERG.COM. Absence of any trademark or service mark from this list does not waive Bloomberg’s intellectual property rights in that name, mark or logo. All rights reserved. © 2024 Bloomberg.
Bloomberg Intelligence is a service provided by Bloomberg Finance L.P. and its affiliates. Bloomberg Intelligence likewise shall not constitute, nor be construed as, investment advice or investment recommendations, or as information sufficient upon which to base an investment decision. The Bloomberg Intelligence function, and the information provided by Bloomberg Intelligence, is impersonal and is not based on the consideration of any customer’s individual circumstances. You should determine on your own whether you agree with Bloomberg Intelligence. Bloomberg Intelligence Credit and Company research is offered only in certain jurisdictions. Bloomberg Intelligence should not be construed as tax or accounting advice or as a service designed to facilitate any Bloomberg Intelligence subscriber’s compliance with its tax, accounting, or other legal obligations. Employees involved in Bloomberg Intelligence may hold positions in the securities analyzed or discussed on Bloomberg Intelligence.