This article is sponsored by Columbia Threadneedle Investments

A glance at our ESG database shows allocators in that space are quite happy to own short-duration bond funds right now, despite recession expectations being elevated.  

Average exposure to short term bonds approaches 2 per cent in ESG portfolios whereas in both income and growth non-ESG portfolios this exposure is closer to 1 per cent.

The most owned bond fund of the lot is EdenTree Responsible and Sustainable Bond, which appears in eight of the ESG portfolios we monitor, having gained a net of two new buyers over the past year or so. 

Meanwhile, the TwentyFour Sustainable Short-Term Bond Income fund has been gaining ground over the past year,  picking up a net of four new buyers in 2022, and an additional one in 2023 to take the total number of portfolios in which it appears to six. 

Royal London’s short duration gilt fund is another mandate which has picked up some new money over the past year or so, attracting a net of two new buyers from ESG allocators in 2023, following on from 2022, when it also picked up two new buyers, bringing its total to four allocators. 

Owning a short duration gilt fund is not a million miles from holding cash, and the most widely owned money market fund among the allocators we cover is Royal London’s Short-Term Money Market fund, which appears in five of the ESG portfolios we cover, with one new buyer and one new seller in 2023. 

It’s the BlackRock ICS Sterling Liquidity fund which has gained some traction in this area, picking up a net of two new buyers this year to date.