Ninety-six per cent of institutional investors and wealth managers across Europe, with combined assets of over €150bn under management, said the number of fixed-income indices will increase over the next two years.

Research by Tabula Investment Management of 100 fixed-income investors across Europe found that 97 per cent believe that ESG fixed-income indexing has created the necessary sustainable building blocks for core portfolio exposures. Those respondents stated that it was now possible to shift core exposures to fixed-income ESG ETFs, without sacrificing risk-adjusted returns or diversification.

Looking at the quality of ESG data for the fixed income market at the current time, one-quarter of institutional investors and wealth managers rate it as excellent; 62 per cent say it is good while 13 per cent say the standard is average.

Commenting, Tabula CIO, Jason Smith, said: “There has already been a marked increase in the number of ESG indices that help passive fixed income investors to find sustainable investment opportunities without giving up returns or the characteristics of their core portfolio exposures. What matters now is that we see a continued improvement in the quality of those indices to ensure they include issuers that have been thoroughly investigated and assessed on their ESG credentials.”

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