October 31, 2019


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:

[learn_more caption=”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stockholders,… and the interests of other stakeholders are relevant as a derivative of the duty to stockholders” has been replaced by a new much broader mandate.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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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,

Mathews Asia


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.


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

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