Issue 28: 2014


A Fixed Income Approach

Community Capital Management

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Please tell us about how you approach ESG investing.

Jamie Horwitz: Actually, we call what we do “impact investing” but there is absolutely an ESG component to it. All of our investments are focused on making a positive impact in the community, for example, by providing jobs, affordable housing or healthy lifestyle initiatives. We currently offer investors several strategies, including intermediate fixed income, tax-exempt, short-duration and alternative income; and essentially all the bonds purchased in these strategies support community development initiatives across the country.

What other kinds of initiatives do you support?

Horwitz: They can include affordable housing, job creation, neighborhood revitalization, healthcare accessibility and environmental sustainability, to name a few. We focus on the ultimate use of proceeds for all impact investments, green bonds included. The environmental component might include investing in bonds that finance small businesses that incorporate sustainability practices, programs that address environmental remediation, the installation of photovoltaic energy systems or affordable rental housing that incorporates environmental practices. One example in the last area is adaptive reuse: a high school, for example, that’s being converted into affordable rental housing.

David Sand, Chief Investment Strategist, and
Jamie Horwitz, Director of Marketing, Community Capital Management
(Photograph of Sand by Michael Warren; Horwitz by John Loomis)


Can you talk a bit more about
a few of the instruments you purchase?

David Sand: In the mortgage area, we might buy mortgages for multifamily housing where renters have income limits or receive government subsidies. This might help a community because it’s affordable rental housing that is frequently, although not always, in an inner city. These instruments generally have high credit ratings from government entities like Ginnie Mae or government-sponsored entities such as Fannie Mae and Freddie Mac.

Horwitz: We also invest in the taxable municipal area. There we might purchase issues from various state or regional entities under the community economic development umbrella, where the underlying purposes are to support housing, neighborhood revitalization or the environment. Green issues and sustainability typically cut across all of these lines. In multifamily housing, for example, maybe there are solar panels on the roof. Maybe when the building was renovated, the work was done with sustainable programs in mind. Or maybe homes were retrofitted to make them more energy efficient.

Sustainability is a hot-button issue right now and evolving quite fast.
Are there any areas you’re supporting that are cutting edge?

Sand: One such area is the evolving field of transit-oriented development. That’s when you situate higher-density residential buildings near public transit. By doing so, you reduce people’s need for using their own vehicles to get to school or to work, which lowers their carbon footprint. When the building is also affordable for low-income renters it can be a winning proposition for everyone involved.

What are some of the risks you face
in the construction or rehabilitation of buildings?

Sand: We purchase bonds that finance building construction and rehabilitation but we’re not responsible for the work that’s done in these phases. Still, some of the risks contractors might face can cause issues, such as a need for abatement if asbestos is found to be present. There is completion risk, or finishing the job on schedule and on budget. Sometimes, contractors underestimate the cost of the job. There may be some environmental-impact issues that weren’t considered in the contract phase. But, again, all of this is part of construction and rehab, and we’re not exposed to or invested in that in any way.

What kinds of investors are your clients?

Sand: Community Capital Management was founded in 1998, and one of the first things we created was a mutual fund for banks. Over time we discovered that nonfinancial institutional investors were also interested in our intermediate-fixed-income strategy. And our client base has since grown to include pension funds, high-net-worth individuals, foundations, religious organizations and more. All of them are interested in furthering their mission via approaches such as impact investing and ESG.

Transparency is an issue in ESG.
What steps do you take to let clients know how you’re investing?

Horwitz: We provide quarterly financial reports, along with impact reports, to our clients that are specific about how we invested their money, which projects are being supported and where on the map those projects are located. We think it’s important to share with clients what their investments have done in terms of community impact and how they may have benefited the environment.




Investing involves risk. There is always the potential of losing money when you invest in securities.

Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those of U.S. Trust or its personnel. Any of their discussions concerning investments should not be considered a solicitation or recommendation by U.S. Trust and may not be profitable.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.


Fixed Income
Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments, and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop, and vice versa.

International Investing
International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility.