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Can multi-asset approaches balance sustainable investing risks? – AllianceBernstein

Sustainable investors are aligning themselves with some of the world's most powerful growth trends – but this approach can inhibit diversification.

Posted on Jan 12, 2023

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... Investors who opt for a sustainable approach are aligning themselves with some of the world’s most powerful growth trends. But this can also inhibit diversification. Applying multi-asset perspectives can address these problems by balancing portfolio risks to improve risk-adjusted return potential.

Sustainable investing approaches aim to deliver attractive returns through investments in issuers that contribute to positive social and environmental outcomes. Yet this massive opportunity can also create risks, because there is a smaller pool of sustainable investment targets to choose from. The backbone of these approaches is implementing a repeatable process for selecting issuers that are aligned with sustainability goals and also have solid business models with strong return potential.

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