Our investment approach focuses on the pursuit of income, consistent returns and capital preservation. Our commitment to achieve these client objectives are the foundation of our decision in 2011 to fully integrate environmental, social and governance (ESG) research with fundamental security analysis. At Breckinridge, ESG research is more than simply a product option. ESG risk analysis is intrinsic to our investment philosophy, intended to improve risk-adjusted returns.
Breckinridge analysts seek deeper, more complete insights when evaluating securities that we believe have these characteristics. Integrating ESG research is intended to expand traditional analysis to include additional risk factors—potentially ones ignored in traditional analysis—deemed to be material.
Breckinridge manages more than $48 billion of fixed income assets for institutional investors and private clients as of March 31, 2024, including more than $9 billion for investors who wish to emphasize sustainability factors or who seek to align their investments with their values via our offerings.
We integrated ESG research into security analysis because we wanted to better understand the long-term sustainability of investments. In our opinion, a thoughtful and forward-looking assessment of risk would be incomplete without the inclusion of material ESG factors.
Simply put we believe that more responsible issuers are less risky over the long run.
Driven by our research team, Breckinridge integrates material ESG issues to analyze and assess long-term and idiosyncratic risks, which we feel the market may misprice.
We believe ESG analysis complements fundamental financial analysis of corporate, municipal and securitized bonds. Fundamental analysis seeks to measure a security's value by examining economic and financial factors. ESG research adds information and insight that we believe can explore material risks more fully.
Beyond a more holistic view of investment quality, ESG research is also about time horizon. Our investment approach is rooted in the idea that understanding the long-term risk-return profile of an investment requires an expanded, more forward-thinking type of analysis.
ESG analysis considers environmental impact, social concerns, reputation, operational governance and potential controversies, among other factors, that may affect the ability of issuers to meet their obligations to investors.
We believe ESG analysis can offer additional metrics when taking the measure of a security's potential to deliver reliable income and total returns to investors. We consider this long-term perspective to be aligned with investors’ expectations for their high grade investment allocations.
Sustainability is not a means of screening out investments. Rather, it broadens our analysis. We think it is additive by revealing non-financial details that help us more-accurately recognize and price long-term risks and costs.
