Editor’s note: Paul Ellis, a well-known advisor and consultant on sustainable investing strategies and writer for Financial Advisor, caught up with three industry experts from Columbia Threadneedle Investments—James Dearborn, head of municipal bond investments and senior portfolio manager; Chad Farrington, head of municipal bond credit research and senior portfolio manager; and Amy Roberts, head of SMA business development—to discuss impact investing strategies.
Ellis: James, Chad and Amy tell us how Columbia got into the social bond management business.
Roberts: I was working in our intermediary sales company when a client inquired about investing in our Threadneedle Social Bond strategy, which is only available to U.K. investors. I started looking for who on our U.S. team might see this idea as worthwhile and James and Chad raised their hands.
Dearborn: I lead the team that manages about $25 billion in muni bond assets for Columbia clients in mutual funds and high-net-worth accounts. We work with a team of analysts and a dedicated trading team. I’ve been in the muni industry for 30 years. I’m the lead portfolio manager on the Social Bond Fund.
Farrington: I’m co-manager of the fund and head of credit research at Columbia and that’s how I got involved, to develop the framework for implementing sustainable and impact investing.
Roberts: Several of our intermediary distribution partners gave us input into the product development process, including Jackie VanderBrug at U.S. Trust, who in turn, introduced us to Sustainalytics. Chad’s team worked closely with them to create a framework that includes the social assessments.
Ellis: When did this process begin at Columbia Threadneedle?
Roberts: The early part of 2014, and we took several months to determine with Columbia Threadneedle’s management team that there was an opportunity for us to create a differentiated product for this market.
Dearborn: My team was convinced when the manager of the Threadneedle Social Bond strategy in the U.K. told us he wished they had a muni bond market there because it’s so well suited for impact investing strategies.
We also felt that working with Sustainalytics would help us identify sectors within the muni bond market like health care and housing where we can make an impact based on the projects the fund finances, the issuers we lend money to and the communities the bonds support. We saw that we could identify good stories that were also good credits.