Archive for October, 2019

PREMIUM – STEPHEN LIBERATORE

October 31, 2019

PREMIEM

Socially Responsible Bond Investing

Bonds with social impact with Five-Star fund manager Stephen Liberatore.

WEALTHTRACK Episode #1618; Originally Broadcast on November 01, 2019

Listen to the audio only version here:

CLICK HERE TO LEARN MORE ABOUT CORPORATE RE-PURPOSE

The influential Business Roundtable, an association of the CEOs of major U.S. corporations recently redefined the purpose of the corporation for the first time in decades. The old focus on stockholders as stated in its 1997 statement of purpose, “the paramount duty of management and of boards of directors is to the corporation’s stockholders,… and the interests of other stakeholders are relevant as a derivative of the duty to stockholders” has been replaced by a new much broader mandate. Download and read the mandate.

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STEPHEN LIBERATORE

Consuelo Mack

Socially responsible investing has taken off and interest in it is accelerating.  As we’ve reported before on WEALTHTRACK, U.S assets invested in companies screened for ESG, or their environmental, social and governance policies grew 38% from 2016-2018 by more than $3 trillion to $12 trillion dollars.  According to U.S. SIF, or the Forum for Sustainable and Responsible Investment, which tracks these funds, that $12 trillion represents 26%, or one in four dollars of the $46.6 trillion of U.S. assets under professional management.

Bank of America Merrill Lynch estimates that another $20 trillion of assets will move into ESG funds over the next two decades, driven by interest from women, millennials and high net worth individuals in particular. The firm’s global research group recently released a report titled: “10 reasons you should care about ESG.” Among their points that I found particularly interesting were:

 – “You can do good and do well “…a strategy of buying stocks that rank well on ESG metrics would have outperformed the market by up to 3 percentage points per year over the last 5 years.” – 70% of U.S. assets can’t be analyzed without using ESG “…Intangible assets – assets tied to reputation, brand and intellectual property – have reached record highs for the S&P 500 companies. Analyzing financial metrics alone simply won’t suffice anymore, in our view.” – “The best signal of earnings risk we have found. “Traditional financial metrics such as earnings quality, leverage and profitability don’t come close to ESG as a signal of future earnings volatility or bottom-line risk.” – “ESG could have helped avoid 90% of bankruptcies.” “…15 out of 17 (90%) of bankruptcies in the S&P 500 between 2005 and 2015 were of companies with poor Environmental and Social scores five years prior to the bankruptcies.”

This week’s guest is a leader in the relatively recent field of fixed income ESG investing, as well as the new area of impact investing in public fixed income markets, where bond proceeds are directed to a specific project or goal and the results are measurable. He is Stephen Liberatore, lead portfolio manager at TIAA Investments for responsible investment fixed income mandates that incorporate ESG criteria. Among his responsibilities is being lead portfolio manager of the firm’s flagship TIAA-CREF Social Choice Bond Fund which he has run since its 2012 inception. The $4 billion plus fund is ranked 5-Star by Morningstar and carries a Bronze Medalist Analyst rating. It has handily beaten 90% of the entire intermediate-term bond category and traditional bond benchmark.

Liberatore will discuss what he looks for as a socially responsible bond investor in a field that has traditionally been dominated by equity investors.

As always, if you miss the show on public television, you can watch it on our website.  If you would prefer to take WEALTHTRACK with you on your commute or travels, you can find the WEALTHTRACK podcast on TuneInStitcher and SoundCloud, as well as iTunes and Spotify. In this week’s web EXTRA feature Liberatore shares how he got involved in socially responsible investing.

Thank you for spending your precious time with us. As we “Fall back” into daylight saving time (except for Arizona and Hawaii) enjoy the extra hour and make the week ahead a profitable and a productive one.

Best regards,

Consuelo Mathews Asia

CONSIDER A SOCIALLY RESPONSIBLE BOND FUND IN YOUR FIXED INCOME MIX

Broad and inclusive ESG screened bond funds:

    • Example: TIAA-Cref Social Choice Bond Fund
    • Covers the wide universe of corporate and municipal bonds plus targeted social and impact issues

Social bonds:

    • Much smaller market
    • Finance social projects including causes helping vulnerable populations

Impact bonds:

  • Tiny market
  • Finance a specific project

No Bookshelf titles this week.

BIG DIVERSIFIER

Consider high-quality taxable bonds

    Categories include:

  • High-quality corporate bonds
  • High-quality ABS (asset-backed securities)
  • High-quality CMBS (commercial mortgage-backed securities)
  • High-quality taxable Municipal bonds
Stock mentions available soon. No stock mentions in this episode.
This transcript will be available soon. More information regarding WEALTHTRACK transcripts can be found here

This is Stephen Liberatore’s first appearance on WEALTHTRACK

SOCIALLY RESPONSIBLE INTEREST

Socially responsible investing started with stocks but Stephen Liberatore became an early adapter in applying it to bond investing.

PETRIE: SAUDI SHOCKER

October 26, 2019

SAUDI SHOCKER

When Crown Prince Mohamed Bin Salman, widely known as MBS, rose to power in Saudi Arabia in 2017 he was heralded as a corruption fighter and modernizer who would shepherd the conservative Saudi kingdom into the 21st century with reforms including allowing women to drive. His reputation has been sullied since with the arrest of groups of prominent wealthy Saudis for alleged corruption. However, the most shocking deed on his watch was the brutal murder of Saudi journalist, turned dissident Jamal Khashoggi in the Saudi consulate in Turkey. Energy thought leader, Tom Petrie who has been involved in the oil industry for nearly 50 years shared his brief observations on this turn of events.

Watch the related WEALTHTRACK episode.

THINK LIKE A CONTRARIAN: CONSIDER ADDING ENERGY EXPOSURE TO YOUR PORTFOLIO

October 26, 2019

THINK LIKE A CONTRARIAN: CONSIDER ADDING ENERGY EXPOSURE TO YOUR PORTFOLIO

PETRIE’S SUGGESTED ENERGY FOCUS: MIDSTREAM COMPANIES

    • MOVE OIL & GAS FROM WELLS TO END USERS
    • PROVIDE INFRASTRUCTURE LIKE PIPELINES, REFINERIES, STORAGE
    • GENERATE HIGH LEVELS OF CASH FLOW
    • PAY DIVIDENDS ON STOCKS, OR INCOME THROUGH MASTER LIMITED PARTNERSHIPS
    • PETRIE’S SUGGESTED ENERGY FOCUS: MEGA OIL AND GAS COMPANIES
    • HAVE FINANCIAL HEFT TO GROW THROUGH ACQUISITIONS AND INVESTMENT

BIGGEST COMPANIES INCLUDE:

  • – EXXON MOBIL
  • – CHEVRON
  • – ROYAL DUTCH SHELL
  • – CONOCOPHILLIPS

Watch the related WEALTHTRACK episode.

Political & Economic Pressures on Oil & Gas Stocks. Industry Veteran Tom Petrie’s Reality Check

October 26, 2019

This page is here for technical reasons. Please click here for the episode page.

POLITICAL & ECONOMIC PRESSURES ON OIL & GAS STOCKS. INDUSTRY VETERAN TOM PETRIE’S REALITY CHECK

October 25, 2019

If you were to follow legendary investor Sir John Templeton’s advice to buy where there is maximum pessimism it might lead you to energy stocks. The energy sector has lagged the S&P 500 since 2016 and has been one of the worst if not the worst-performing industry sectors over the last year.
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