NEW YORK (TheStreet) -- TheStreet TV's Gregg Greenberg sat down with Stephen Liberatore, portfolio manager for the Social Choice Bond Fund, a fund that likes to pick best of industry bonds while "applying social criteria to all of our holdings."
The fund selects socially responsible bonds that meet the "ESG" criteria, for environmental, social and governance, he explained.
In general, when investing in investment grade bonds, the key isn't to pick winners but avoid the losers, he said. For instance, a company that has poor governance, such as accounting issues, could be a poor investment. Also, a company that has financially impactful exposure to environmental risks and concerns could be negatively affected as well.
Liberatore likes pro-active social investments that have direct and measurable social and/or environmental impacts. For example, one of his favorite picks is Topaz Solar Farm, which is owned by Berkshire Hathaway (BRK.A) via MidAmerican Energy.
The company's soon-to-be completed solar project "will be the largest commercially operated solar power project in the U.S.," he said. It can power some 160,000 average homes and is the equivalent to taking 72,500 cars off the road per year.
As a bond investor, Liberatore has to have an outlook on interest rates, which are expected to rise next year. He agrees that rates are headed higher, but not until the third or fourth quarter. "I've been a little bit different than the rest of my peers," he explained, by owning longer duration bonds.
Liberatore says he's not as big a believer in the economic recovery and hypothesizes that wage growth and inflation will only increase slowly going forward.
-- Written by Bret Kenwell