Uncovering the Wonderful World of Fixed Income Bonds
Elizabeth and an Egyptian man in the Valley of the Nobels in Egypt
Twenty years ago, I was standing inside a tomb near Luxor, Egypt, watching as the lid of a sarcophagus was opened. The lead archaeologist on our team was leaning over a mummy that no one had seen for millennia, delicately cleaning off sand with a small brush. I’ll never forget the dusty air that made the light feel almost solid, or the feeling of wonder as the lid was lifted. Beyond the exit of the tomb lay an expansive vista of the Nile, a slice of vibrant green cutting through the rolling sunbaked mountains of the desert.
There are moments in life that change your perspective forever, and at that moment I felt like all of us gathered in that tomb were connected to this person who lived thousands of years ago. History was made tangible. Everyone on the team came from different walks of life, perspectives, and religions, but our shared goal connected us to each other. Borders and preconceptions fell away in the face of a larger goal.
In my weeks working on the dig, we unearthed an incredible story spanning from ancient to modern times, collecting disparate pieces of information to understand events. I came to appreciate that uncovering layers and looking deeper isn’t exclusive to archaeology. I saw a tapestry where people, place, culture, context, and planet were essential for true understanding — not only of the past, but of the present and the future.
While far from the traditional path, the transition from archaeology to bonds may not be as radical as it first appears. Many aspects of the bond market, especially in inefficient or emerging markets, require a lot of digging. I feel like a detective in my work, gathering information from various sources and perspectives to construct a narrative. I often get sideways, skeptical glances when I exclaim, with passion, that I love bonds.
I still have the same sense of wonder I had in that tomb halfway across the world, but now it’s directed toward investing with a global perspective and a sustainable lens. With 17 years in the world of fixed income, I am part of the 12.5% of portfolio managers who are women, working every day to gain a deeper understanding of our world and the systems that function within it.
Journey to Finance
Some people know finance is their future. For me, the decision was based on need. The looming specter of six-figure student loans cast a dark shadow on my plans to be an archaeologist. I wanted a career that had the intellectual feeling of archaeology, but with more hope of digging myself out of debt. I found sustainable finance by pure chance. A roommate connected me with a venture capital firm specializing in green energy.
Graduating college, it took more than 50 interviews to find a firm that appreciated my non-traditional background and gave me a chance in a rotational investment management program. I started from scratch, opening Excel for the first time in my life on my first day of work and learned bond basics on the job. Taking night classes and studying for the CFA exam led me to the municipal bond market where I finally found my ideal fit. Bond analysis is a complex puzzle, perfect for curious minds seeking connections between financial markets and real-world outcomes.
A decade later, I transitioned to global bonds and sustainable debt investing. Bonds, though often overlooked, are uniquely tangible and integral to our daily lives. They finance the infrastructure we use every day — the schools we attend, the roads we drive — and can direct money toward specific projects. These properties make them vulnerable to climate risks, yet crucial to financing a sustainable economy.
Unearthing Climate Risks and Opportunities
Climate change poses significant challenges to our globalized world, demanding innovative research for evaluation. The human and economic toll of climate change is already evident, with rising temperatures causing increasing deaths, and climate disasters claiming the lives of more than 12,000 people globally in 2023. Food scarcity, wildfire smoke, water shortages, and flooding are impacting the quality of life for millions.
The challenge for investors has always been how to navigate these risks and incorporate their analysis into the investment process. There is still no consensus on the potential impact to financial markets or how much risk is currently priced into the markets. Academic journals largely ignored climate-related financial risk until about 2010.
However, a there is growing body of literature on asset pricing not reflecting the risk and we could see global gross domestic product losses up to 12% for every degree of warming. Under this scenario, a 3 C temperature increase could cause declines in output, capital, and consumption that exceed 50% by 2100 — a material risk for investors. Even today, we see that sovereign debt issued by countries with very high physical risk from climate change have a default probability more than 18% higher than countries with low risk.
This highlights why investing with a global perspective is critical. The emerging markets and developing economies account for 95% of the increase in global greenhouse gas emissions. Despite this, they only account for 14% of global climate finance. There is a massive funding gap, and the bond market will be an important tool going forward in filling it. The growing market for green, blue, and sustainable bonds offers unique opportunities, but also requires critical evaluation of each project.
One of the reasons I have chosen my current firm is because values-based investing is at Saturna’s core and has been for since the company’s inception more than 30 years ago. Our approach to assessing climate resilience is comprehensive, examining carbon emissions trends, sector-specific risks, governance, and opportunities in the low-carbon transition. We also look to an investment’s ability to effect positive change, including bond issuers’ potential positive impact.
Looking Toward the Future
As we face an uncertain future, the need for sustainable debt investing grows. My work reminds me daily of the important connections between people, planet, and investments. When I stepped out of that tomb in Egypt and felt the blazing sun on my skin, I had no idea that my current job even existed in the world. My hope is that future investors look beyond traditional boundaries and uncover unexpected opportunities in the world of finance.
We need people with diverse backgrounds and intellectual curiosity to forge the way ahead in the fixed income market. There has never been so much opportunity for change, nor risk if change is not realized.
Article by Elizabeth Alm, Senior Investment Analyst and Portfolio Manager focused on integrating sustainability into fixed-income investment strategies at Saturna Capital. She has been at Saturna since 2018 and is a portfolio manager on several fixed-income mutual funds with strategies in global and emerging market sustainable bonds and US domestic markets.
Prior to joining Saturna, Ms. Alm spent 11 years at Wells Fargo Asset Management as a senior research analyst, focusing on high-yield and investment-grade municipal bonds. As part of her previous role, she also worked on the management of several municipal SMA strategies. Ms. Alm is a Chartered Financial Analyst® (CFA®) charter holder. Originally from Connecticut, she graduated from New York University with degrees in Economics and Anthropology, including field work completed in Luxor, Egypt.
Energy & Climate, Featured Articles, Impact Investing, Sustainable Business
In 1995, I set off on a solo backpacking trip through Sub-Saharan Africa, where I witnessed poverty on a scale I had never seen before. That journey altered the course of my life. At the time, I had just left my job as a VP at a technology startup. When I returned, I knew I wanted to dedicate my career to building a more equitable and sustainable world. What I didn’t realize then was that this decision would eventually lead me to rethink how I invested my money — and to uncover the power of collective action.
Change isn’t coming – it’s already here. Venture capital is undergoing a seismic shift, and if you’re not investing in women-led and diverse startups, consider this your wake-up call. Investors who aren’t yet looking at the untapped potential of these founders are missing out on some of the most exciting and profitable return opportunities in today’s financial markets.
After she had her first child and came back to work, my then-colleague Amy Orr (now of Boston Common), shared with me an interesting observation: she was getting more done at work, and with more impact. The urgent need to get home at the end of the day had sparked within her a new sharpness and focus to her workdays.
For centuries, Indigenous Peoples and communities have been colonized, stolen from, discriminated against, marginalized, and neglected. To restore economic justice, investors and capital-holders must consider this history and reality, and then determine if, how, and when they will take action to facilitate a reimagined, inclusive economic future. Investment opportunities exist to support this transition and promote Indigenous economic livelihoods.
Imagine it is Thanksgiving, and you’re running late. You walk into your grandparents’ house and your cousins, who have been playing Monopoly for a few hours already, invite you to play. From the first pass of “Go”, the game is a struggle for you. Sure, you pass “Go” and collect $200, like the rest of the players. You have the same “opportunities” since you are playing on the same board, but you’re at a severe disadvantage because this game was not designed for your late arrival. To you, success is just getting around the game board without going bankrupt. To them, success looks like earning rental income from the houses and hotels on the good properties. 
Native Americans struggle financially in rural Oklahoma, where land is often of poor quality for traditional farming and non-agricultural jobs are scarce. These problems are compounded by cultural barriers hampering their access to the economic and technical resources that could help them to achieve greater success and a better quality of life. The Euchee Butterfly Farm, a Native woman-owned LLC small business located on the Muscogee Nation Reservation, is using butterfly farming as a platform to address these issues. The farm is located on 68-acres of original Native American allotment land that has been continuously held by descendants of the original allottee for 124 years. It is a working butterfly farm, but also a teaching facility with conference space, classrooms, butterfly flight houses, greenhouses, demonstration gardens, a teaching kitchen, a native prairie remnant, and a pecan orchard.
As a pioneering force in advancing Indigenous economic sovereignty, the Wisconsin Indigenous Housing and Economic Development Corporation (WIHEDC) stands where sustainable development and cultural resilience meet. WIHEDC, a 501(c)(3) nonprofit, partners with four Native Community Development Financial Institutions (CDFIs) to catalyze economic transformation across Wisconsin’s Tribal communities. Together, these CDFIs – Cedar Growth, First American Capital Corporation, Wisconsin Native Loan Fund, and Woodland Financial Partners – act as the pillars of WIHEDC’s mission to build financial sovereignty and homeownership for Native individuals, families, businesses, and Tribal enterprises. 
