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"Green" bonds not only have positive environmental consequences, but they are also beneficial to your portfolio, said Stephen Liberatore, portfolio manager for the TIAA-CREF Social Choice Bond Fund (TSBRX) - Get TIAA-CREF Core Impact Bond Fund Retail Class Report .

"Green bonds offer companies and municipalities the opportunity to talk about the good things they are doing and that is making them very popular with millennials," said Liberatore. "The attractive yields and total returns make them attractive to me."

The TIAA-CREF Social Choice Bond is an actively managed fixed-income fund that invests in investment-grade securities that meet certain environmental, social and governance (ESG) criteria.

In addition to filtering out companies that don't meet the fund's social guidelines, Liberatore proactively targets 10% to investments in socially beneficial companies and projects such as affordable housing, community or economic development, renewable energy and natural resources.

The TIAA-CREF Social Choice Bond Fund is up 3% thus far in 2016, according to Morningstar. The $749 million fund has returned an average of 3.5% annually over the past three years, outpacing 98% of its Morningstar category peers.  

One green bond in particular Liberatore is bullish on is a Georgia Power issue that teams the utility with the Department of Defense.

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"It's a unique partnership that utilizes excess land on five military bases to install solar panels and it provides power for 30,000 homes," said Liberatore.

He is also constructive on a Toyota Asset Backed Security (TM) - Get Toyota Motor Corporation Report  that funds only electric and hybrid vehicles.

"It shows you that auto bonds can be positive on climate change as well," said Liberatore.

As for the overall bond market, Liberatore said he expects a single rate hike from the Fed in 2016 and a pair at most.

"The Fed is not being rushed by the inflation data, so they do not have to move that quickly," said Liberatore.