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  • Trends with Benefits

    Trends with Benefits #65: Investing in Sustainable Communities with R. Paul Herman of HIP Investor

    Ed Lopez, Head of ETF Product
    September 28, 2021
     

    In this episode, I speak with R. Paul Herman, CEO and Founder of HIP Investor about the risks that climate change pose to our communities, and the growing demand for investments in sustainable projects. We discuss his firm’s approach to rating corporations and municipal issuers for their impact across a plethora of sustainability metrics.


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    Climate Change and The Municipal Bond Market

    Paul and I begin our conversation by discussing the growing demand and need for investments in sustainable projects. In particular, we discuss what makes for a sustainable community and what goes into evaluating the sustainability of municipal bonds.

    As the effects of climate change seem to be more frequent and destructive, investors have increasingly turned toward opportunities to direct funds not only for profit, but for good. Sustainable mutual funds and ETFs, as tracked by Morningstar, have seen inflows of $46 billion year-to-date through July 2021. This is well on the way to surpassing last year’s record flows of $52 billion. Similarly, municipal bond mutual funds and ETFs saw $75 billion of inflows year-to-date, which is already past 2020’s full year flows of $57 billion. These two trends converge into the main topic of the discussion I had with Paul about sustainable munis.

    H.I.P. refers to Human Impact and Profit, which very succinctly alludes to HIP’s unique approach of measuring future risk, return potential and net impact on society. Paul explains how HIP Investor prioritizes quantitative data of actual results, and how evaluating performance can be more powerful than only adopting policies.. Paul explains how HIP Investor produces ESG impact ratings, ratings on UN Sustainable Development Goals, climate threat resilience ratings and opportunity zones to assess overall sustainability. As an example of how these considerations play out in communities, Paul compares and contrasts the cities of Seattle and Memphis.

    The municipal bond market plays an important role in the fight against climate change. Not only is this market a destination for investors seeking potential tax-free income, but for all of us, the projects they finance will impact how they live and thrive.

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    IMPORTANT DISCLOSURES

    Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) may offer investments products that invest in the asset class(es) discussed in this podcast.

    The views and opinions expressed are those of the speaker(s) but not necessarily those of VanEck. Commentaries are general in nature and should not be construed as investment advice. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Any discussion of specific securities/financial instruments mentioned in the commentary is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.

    ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.

    © 2006-2021 HIP Investor Inc. All Rights Reserved. The information contained herein: (1) is proprietary to HIP Investor and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither HIP Investor nor its content providers are responsible for any damages or losses arising from any unauthorized use of this information. Past performance is no guarantee of future results. All investing entails risks.

    All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.

    Van Eck Associates Corporation

  • Authored by

    Ed Lopez
    Head of ETF Product

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