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Fidelity International Expands its Sustainable Offering with a Global Equity Fund Targeting Decarbonization

lanzamiento fidelity — Foto cedidaDe izquierda a derecha: Velislava Dimitrova, gestora principal de Fidelity Funds - Sustainable Climate Solutions Fund; y Cornelia Furse, cogestora de la estrategia.. Fidelity International amplía su gama sostenible con un fondo de renta variable global para la descarbonización mundial

Fidelity International (Fidelity) has announced the launch of the Fidelity Funds — Sustainable Climate Solutions Fund, a global equity portfolio of leading companies that benefit from decarbonization. It will be managed by experienced sustainable thematic investors Velislava Dimitrova and Cornelia Furse.

In a press release, the asset manager has revealed that the fund aims to achieve long-term capital growth by investing in companies which enable global decarbonisation efforts. In other words, firms that offer technologies and solutions that materially reduce greenhouse gas emissions versus incumbent technologies. Investments will include companies involved in the design, manufacture or sale of products or services in technologies or solutions such as (but not limited to): electric vehicles, green hydrogen, autonomous vehicles, renewable energy, smart grids, industrial automation and agricultural efficiency.

“Climate change has prompted decarbonisation policies around the world to help achieve global carbon neutrality. The world needs to decarbonise urgently, at a faster pace that we have seen to date, and investors can play a major role in supporting this change. The decarbonisation challenge is on a scale unmatched in human history. But it is one that offers the companies meeting it a 30-year period of growth that surpasses even the internet revolution. Our Sustainable Climate Solutions Fund offers investors access to this long-term global megatrend”, says Dimitrova, Co-Portfolio Manager.

Fidelity believes that to keep global warming to the 1.5 °C above pre-industrial levels as recommended in the Paris Agreement, the global economy will need to go through a radical transformation, affecting every area of human activity. This means reversing over 150 years of rising greenhouse gas emissions and reaching, or exceeding, net zero targets within 30 years – at a cost of 144 trillion dollars, almost seven times annual US GDP. According to the firm’s analysts, the race to net zero is on, and almost a quarter of all companies will be carbon neutral by the end of this decade.

Furse, Co-Portfolio Manager of the strategy, points out that unlike other climate funds, this one focus on carbon reduction, not carbon avoidance. “Investing in low emission sectors will not be enough to reverse 150 years of rising greenhouse gas emissions. Our fund will identify and invest in existing and emerging solutions that help decarbonise society. The decarbonisation trend is currently at the early stage of penetration and will be driven by a combination of innovation, improving economics, accelerated governmental support and changing consumer behaviours. It is the stocks exposed to these themes that will drive superior investment opportunities for our investors”, she adds.

The Fidelity Funds — Sustainable Climate Solutions Fund, which is classified Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR), forms part of Fidelity’s expanding Sustainable Family of Funds. The asset manager currently manages more than 10 billion dollars in sustainable funds across its equity, fixed income, ETF and multi asset.

“We strive to become a trusted partner to our clients, delivering innovative investment solutions that meet their financial and non-financial objectives. Investing sustainably is key to achieving this. Our Sustainable Family of Funds has grown substantially in recent years, and I am pleased that we can now offer clients access to the decarbonisation megatrend”, highlights Christian Staub, Managing Director Europe at Fidelity.

In his view, the race to net zero “is on”; that’s why they have also committed to reduce their operational carbon emissions to net zero by 2040, and they’re working collaboratively with peers in the Net Zero Asset Managers initiative, supporting and the transition towards global net zero emissions.

About the portfolio managers

Velislava Dimitrova has 13 years of investment experience. She joined Fidelity in 2008 and worked as an analyst until 2014, covering a number of sectors including European Media, European Utilities and Materials. She was subsequently appointed co-Portfolio Manager on global team-based portfolios where she had specific sector responsibilities, including the Fidelity Global Demographics strategy between 2017-19, which cemented her interest in thematic products. In 2018, she built on her vision of running a sustainable thematic strategy when she conceptualised and started managing Fidelity Sustainable Climate Solutions, where she is currently Lead Portfolio Manager. In February 2021, Velislava took on a Lead Portfolio Manager role for the Fidelity Sustainable Water & Waste strategy. She has an MBA from MIT Sloan and a BBA from Sofia University.

Cornelia Furse has 11 years of investment experience. She joined Fidelity in 2010 and worked as an analyst until 2021 covering a number of sectors including European Mid-cap Utilities, US Health Care, US Consumer Discretionary and US Capital Goods. She was appointed co-Portfolio Manager on the Fidelity Sustainable Climate Solutions strategy in 2019 and as co-Portfolio Manager on the Fidelity Sustainable Water & Waste strategy in February 2021. She has an MA in Classics from Oxford University.

Neuberger Berman Appoints Sarah Peasey as Director of European ESG Investing

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Nimalan Tharmalingam City of London — Pixabay CC0 Public DomainNimalan Tharmalingam . Nimalan Tharmalingam

Neuberger Berman, a private, independent, employee-owned investment manager, has announced the appointment of Sarah Peasey in the newly created position of Director of European ESG Investing.

Based in London, she will report to Jonathan Bailey, Head of ESG Investing, and will work directly with the investment teams to further incorporate ESG principles across asset classes and to enhance long-term value for clients.

Peasey joins Neuberger Berman from Legal and General Investment Management (LGIM), where she served as Head of Responsible Investment Strategy – Investments. There she worked closely with the CIO to drive long term responsible investment strategy, with a focus on research and portfolio management across all investment capabilities, whilst also providing the investment perspective to support product innovation and shape client solutions. Prior to this, she was an Investment Strategist and head of fixed income investment

‘‘Sarah brings with her more than a decade of investment experience and we’re thrilled to have her on board as we continue to engage our European clients on important sustainability topics like net zero. She will work with our investment teams across the region to continue to innovate their approach to ESG investing”, Bailey commented.

Meanwhile, Dik van Lomwel, head of EMEA and Latin America, pointed out that Neuberger Berman has a long history of integrating ESG into investment processes while helping their clients achieve their investment goals. “With Sarah’s extensive experience, we hope to further generate sustainable, long-term returns for our clients through our approach to ESG, as seen in our recent £1.3bn climate transition-related multi-asset credit mandate from the Brunel Pension Partnership which is designed to align Brunel’s portfolio with the Paris Climate Agreement”, he concluded.

La Française AM Boosts its Management Team with Three New Talents

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La Francaise_0 — Foto cedidaPaul Troussard, Victoire Dubrujeaud y Delphine Cadroy. Paul Troussard, Victoire Dubrujeaud y Delphine Cadroy

To support the development of its High Yield credit and Large Cap equities expertise, La Française AM, the securities investment manager of the group La Française, has announced in a press release the arrival of three new talents.

Victoire Dubrujeaud and Delphine Cadroy have joined the High Yield team, led by Akram Gharbi, Head of High Yield Investment, within the credit division, headed by Paul Gurzal, Head of Credit. The asset manager believes that they will both enhance the strong development of La Française AM’s expertise in fixed maturity funds, which represents more than 1 billion euros in assets under management (as at 31/05/2021).

Dubrujeaud, High Yield Fund Manager, will bring “a solid knowledge of the high yield market” acquired over ten years of experience, mainly as a credit analyst. She began her career at Amundi Asset Management as an Investment Grade Credit Analyst, specialising in the consumer, distribution and healthcare sectors, before diversifying into High Yield in the chemicals, metals and gaming sectors. In 2017, she joined SCOR Investment Partners as a High Yield and Leveraged Loans Analyst, then became Fund Manager/High Yield Analyst at ODDO BHF Asset Management in 2019 where she managed nearly 2 billion euros in fixed maturity funds.

Cadroy, High Yield Fund Manager, joins La Française AM after five years of international experience beginning in London with Société Générale as an analyst in syndicated loans, before joining Amazon, then Moody’s as an Analyst in Leveraged Finance, responsible for a portfolio of twenty companies, rated high-yield and operating in the healthcare, business services and consumer sectors.

“The development of the high-yield market and the growing demand from investors for this asset class are pushing us to strengthen our expertise in this area and expand our international coverage”, Gharbi, Head of High Yield Investment, commented.

Besides, Paul Troussard has joined the Large Cap Equities team to strengthen the coverage of the euro zone, under the direction of Nina Lagron, Head of Large Cap Equities, who said that his arrival will allow them to “focus on the team’s new sustainable investment themes.”

Troussard, Large Cap Equities Fund Manager, spent more than four years at Clartan Associés as a European equities fund manager, all sectors. There, he developed an expertise in extra-financial analysis by participating in the implementation of an ESG (Environmental, Social and Governance) investment strategy and in the launch of a sustainable European small and mid-cap fund.

DAVINCI Hires Esteban Morgan as Sales Manager for Argentina

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Captura de Pantalla 2021-08-30 a la(s) 13 — Foto cedidaEsteban Morgan. ,,

Esteban Morgan has joined DAVINCI Trusted Partner as Sales Manager for Argentina, the financial services firm’s founders, Santiago Queirolo and James Whitelaw, confirmed to Funds Society.

Morgan will be responsible for serving the Argentine clients of DAVINCI, a company that currently distributes the strategies of two international asset managers: Allianz Global Investors and Jupiter Asset Management.

“It is essential for us to have a local presence in Argentina. It is a strategically important decision that reinforces our commitment to our clients and allows us to continue with our growth plans in the region. Additionally, the pandemic continues to make travel difficult, so we are excited to bring Esteban on board so that we can be closer to the advisors who have always been with us,” explained Queirolo, Managing Director of DAVINCI Trusted Partner, at the company’s Montevideo headquarters.

Morgan holds an Economic degree from Universidad Torcuato Di Tella (Buenos Aires) and in 2018 he approved the master’s in finance courses from the same university. In 2019 he performed satisfactorily the Level 1 exam from the CFA Program. With more than 8 years’ experience in the financial sector, Esteban started his career in the Portfolio Personal’s commercial team (PPI).

Recently he worked as a VP in the Santander Argentina Investment Banking team participating in the execution of multiple structured finance transactions including syndicated loans, debt capital markets issuances, export & agency finance loans and corporate finance for main banks clients. This year he was appointed as responsible for leading Sustainable Financing alternatives, advising clients in green loans certification and compliance with ESG standards.

Meanwhile, the firm maintains its international expansion plans in the other relevant Latin American markets. “We have restructured our team to deepen our presence in key markets such as Chile, Peru, Colombia, Panama and Brazil. As health protocols allow, we will begin to visit our clients and present Jupiter Asset Management’s strategies,” explained Whitelaw, Managing Director of the firm created a year ago.

Aberdeen Standard Investments Expands Its Agreement with Excel Capital to Cover the Latam Wholesale Market

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Captura de Pantalla 2021-08-23 a la(s) 14 — CC-BY-SA-2.0, FlickrSantiago de Chile y Cordillera de los Andes. ,,

Aberdeen Standard Investments (ASI) has announced this week that it has signed a partnership agreement with Excel Capital (XLC) to strengthen its presence in the Latam wholesale market, after more than 10 years of “fruitful joint collaboration” in the institutional Latam market.

The asset manager has highlighted in a press release that as a result of this deal, Excel Capital will support its wholesale efforts in Argentina and Uruguay with immediate effect, and Chile, Colombia and Peru, effective October 1^st 2021.

With employees in more than 40 locations worldwide, ASI currently manages a total of 629.4 billion dollars of assets on behalf of governments, pension funds, insurers, companies, charities, foundations and individuals across 80 countries (as of 30 June 2021). Its full range of solutions span equities, multi-asset, fixed income, liquidity, sovereign wealth funds, real estate and private markets.

The US Offshore market and the Latam Wholesale markets are covered by ASI´s US Offshore and Latam Wholesale Team led by Menno de Vreeze, split between Miami, New York and Brazil and which has been covering the region for many years. “Indeed, in the last years, the team has been building a great foundation on the Wholesale side in LATAM with signing many agreements and already raising considerable assets”, says the press release.

Launched in 2015, and with clients’ assets of 4,355 million dollars currently invested (as at the end 2020), XLC is a company dedicated to mutual fund distribution private equity placements throughout Latam (ex-Brazil). Over the last years, it has been building a strong Latam Wholesale team, co-led by Jose Tomas Raga and Macarena Leon, and has achieved great success with raising assets for some international asset management companies in Chile, Colombia and Peru.

After announcing opening its Mexican office and starting coverage there earlier this year, XLC has recently announced the hiring of a Senior Managing Director for Argentina and Uruguay, Cristian Reynal, who has a great reputation and experience in the market.

“We are very excited about this new partnership agreement with XLC which comes following a great momentum achieved in the last years in the LATAM wholesale market for us. For that reason, we deem now the time has come to go to the next level and strength our footprint with a local Sales team on the ground to further raise our profile”, commented Menno de Vreeze who is responsible for the US Offshore and Latam Wholesale Market.

In his view, the XLC team has “strong credentials and reputation” in that market, and will work very closely with their US Offshore team in the US to deliver “a world class service” to existing clients and prospects. “Besides, XLC has been already working for many years successfully with us on the institutional side in Latin America with my colleague Linda Cartusciello (Senior Business Development Manager)”, he added.

Meanwhile, Gaston Angelico, Managing Partner of Excel Capital, said that they are “proud” that ASI continues to trust them as their strategic partner in Latam to further develop its asset management business, now giving them the opportunity to work together in the wholesale market, in addition to the already-existing institutional relationship.

“This deeper and stronger partnership with ASI is a core business to XLC, as our strategy is focused on providing highest possible quality sales service to regional clients and investors, direct client support through local teams and offices in each of the countries that we cover, as well as facilitating access to all the best-in-class products that ASI offers”, he concluded.

Lastly, Cristian Reynal, Managing Director of Excel Capital pointed out: “When I learnt we’d be distributing ASI funds, I immediately decided to take the leap. Their well-known brand and wide range of products has been a recipe for success in the territory. As a competitor in the past, I often came across their emerging market debt funds as well as their Asian/Chinese equities’ strategies. I’m glad to be on the same team now!”.

China and the US Lead the Recovery of the High-End Market

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oldtimer-4097480_1920 — Pixabay CC0 Public Domain. China y Estados Unidos impulsan el crecimiento y la recuperación del sector del lujo

After a year in which the only increase in consumption was recorded in the upper part of the luxury consumer pyramid, whose market share doubled compared to the previous year, the global market is gradually recovering and is estimated to return to pre-pandemic levels by 2022, according to the “True-Luxury Global Consumer Insight”, a report by Boston Consulting Group and Altagamma.

Their conclusions show that the push comes above all from US consumers, whose luxury purchases have restarted more quickly than expected, thanks to the strong government support, and from Chinese consumers, who confirm the trend towards the repatriation of purchases, started during COVID-19.

This recovery is due to a “rebound effect”: the desire for luxury increases in post-pandemic. In this sense, the report shows that spending expectations of high-end consumers in the 12 months are generally positive: the consumers’ feeling is slightly opposite for personal and experiential luxury, with the first one expected to benefit from domestic consumption, and experiential luxury forecasted to be increasingly supported by abroad spending.

Millennials and Gen. Z are the other growth drivers and will account for 60% of total consumers by 2025. Among the major trends in consolidation: the increasing virtualization of luxury (new digital tools for engaging the consumer), the polarization of values between Western and Eastern styles, an omnichannel-centered distribution system and a growing attention towards the values of brands, in terms of environmental sustainability and inclusiveness.

“The report shows positive signs for 2021, beyond expectations. China and especially the US are driving growth with more than a third of international consumers planning to increase spending on high-end goods and experiences, including travel. The sector has shown solidity and quickly captured the new socio-cultural trends. Sustainability is certainly one of these, but the strong virtualization of the luxury experience is also striking, as highlighted by the success of sales in livestreaming and by gaming, a sector that reached the value of $178 billion in 2020”, says Matteo Lunelli, President of Altagamma.

If Europeans are cautious about domestic spending and more pessimistic about foreign spending for the next 12 months, US and Chinese consumers stand out for their optimism, placing themselves as potential growth drivers of the personal luxury market in the near future.

“Americans are back” comments Sarah Willersdorf, Managing Director and Partner at Boston Consulting Group. In this sense, she points out that US consumers are bullish on both domestic and abroad luxury consumption expectations, showing Americans are poised to regain their importance in the Global Luxury market. Such renewed optimism is expected to produce a share increase versus pre-covid forecasts of +2-3 p.p., estimated at 19-21% by 2025.

“Consumers from China are also planning to increase their spend but also continuing to repatriate it, with an acceleration here as well versus pre-pandemic estimates in terms of share, amounting to +3-4 p.p., to reach 43-45% in 2025. Brands will need to take a strategic stance towards these two consumers clusters that, besides diverging tastes in terms of style, entail different implications in terms of marketing and distribution footprint investments”, she adds.

The report highlights that virtualization of luxury is an increasingly defined reality that can pose great opportunity of additional revenues stream for the brands. “Particularly gaming: amongst the 39% of consumers who have claimed to be aware of the existence of virtual online games that involve a luxury brand, 55% of them state to have bought in-game items. Amongst them, 86% state to have then purchased the corresponding physical version”, it says.

Other trends that stand out are the boost of social and live commerce (i.e. livestreaming), with the interactions between customers and brands becoming increasingly direct and digitally focused; and clienteling 2.0, the importance of the “human” touch. “Compared to last year, a personalized “touch” remains key for consumers when reached across all digital and physical avenues by a brand, confirming the need for brands to create a more 1-1 relationship with the customer across all touchpoints”, concludes the report.

Goldman Sachs Acquires Dutch Asset Manager NN IP for 1.7 Billion Euros

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Corporate moves continue in the global asset management industry. The Goldman Sachs Group has announced that it has entered into an agreement to acquire the Dutch asset manager NN Investment Partners (NN IP) from NN Group N.V. for approximately 1.6 billion euros (1.87 billion dollars), consisting of a base purchase price of 1,515 million.

This amount doesn’t include a ticking fee and excess capital of 50 million euros to be distributed in the form of a dividend before completion, so the final figure could rise to €1.7 billion. The transaction is expected to close by the end of the first quarter of 2022, subject to regulatory and other approvals and conditions, reveal the statements released by both firms.

As part of the agreement, NN Group and Goldman Sachs Asset Management will enter into a ten-year strategic partnership under which the combined company will continue to provide asset management services to NN Group.

The combination of the complementary investment capabilities of NN IP and Goldman Sachs will create a full suite of asset management products that can be offered to clients through the distribution networks of both parties. At the same time, NN IP has highlighted that its “leading position” in responsible investing will strengthen Goldman Sachs Asset Management’s sustainable investment strategy, product offerings and client solutions.

A stronger European business

NN IP is a leading European asset manager based in The Hague, Netherlands, with approximately $355 billion in assets under supervision and $70 billion in assets under advice. It offers a broad range of equity and fixed income products, with a strong ESG integration across its business. Besides, it is a top-ranked ESG manager in Europe and 75% of its assets under supervision are ESG integrated. With a heritage dating back almost 175 years, NN IP employs more than 900 professionals in 15 countries and combines the use of data and technology with fundamental analysis in its investment processes.

NN IP’s employees will join Goldman Sachs Asset Management following the closing of the transaction and both firms expect that the Netherlands will become a significant location in GSAM’s European business. “We believe that their expertise will strengthen our fund management and distribution platform across retail and institutional channels in Europe and support us in delivering long-term value to clients”, said Goldman Sachs in its press release.

In their view, NN IP is highly complementary to their existing European footprint and will add new capabilities and accelerate growth in products such as European equity and investment grade credit, sustainable and impact equity, and green bonds.

Goldman Sachs has $2.3 trillion in assets under supervision globally, and this transaction will bring assets under supervision in Europe to over $600 billion, aligning with the firm’s strategic objectives to scale its European business and extend its global reach.

As a result of the agreement, Satish Bapat will step down from his role as a member of the Management Board of NN Group. He will continue to lead NN IP in his role as CEO.

A strategic partnership

Meanwhile, the combination with Goldman Sachs gives NN IP a broader platform to accelerate its growth and further improve the offering and service to its clients. It will also allow NN Group to continue its cooperation with NN IP and to benefit from the strengths and complementary product propositions of Goldman Sachs.

As part of the agreement, GSAM will enter into a long-term strategic partnership agreement with NN Group to manage an approximately $190 billion portfolio of assets, reflecting the strength of the business’ global insurance asset management capabilities and alternatives franchise.

The partnership will establish Goldman Sachs as the largest non-affiliated insurance asset manager globally, with over $550 billion in assets under supervision, and the acquisition will provide a foundation for further growth in the firm’s European fiduciary management business, building on the success of its platform in the United States and United Kingdom.

“This acquisition allows us to accelerate our growth strategy and broaden our asset management platform. NN IP offers a leading European client franchise and an extension of our strength in insurance asset management. Across their offerings they have been successful in integrating sustainability which mirrors our own level of ambition to put responsible investing and stewardship at the heart of our business. We look forward to partnering with the team at NN IP as we focus on delivering long-term value to our clients and our shareholders”, commented David Solomon, Chairman and CEO of Goldman Sachs.

Meanwhile, David Knibbe, CEO of NN Group, pointed out that they have a “longstanding and successful” shared history with NN IP. “We value this strong and constructive relationship that we have and we look forward to further building on it in a new form. This transaction brings together two international asset managers, each with many decades of investment experience. We have found a strong and professional partner in Goldman Sachs, providing an environment in which our NN IP colleagues can continue to thrive, while the combined investment expertise and scale will enhance the service offering to their clients, including NN Group”, he added.

Paul Camp is Appointed Head of New Global Treasury Management Group at Wells Fargo

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PaulCamp810 — Foto cedidaPaul Camp, head de Global Treasury Management Group en Wells Fargo. Foto cedida

Wells Fargo has named Paul Camp head of its new Global Treasury Management unit. Most recently CEO of Treasury Services at BNY Mellon, he will join the company in November and will dually report to Perry Pelos, CEO of Wells Fargo Commercial Banking, and Jon Weiss, CEO of Corporate & Investment Banking.

This new role brings together Wells Fargo’s Treasury Management and Global Payment Solutions teams into one organization that provides global cash management and payments services. “By combining these businesses, Wells Fargo will be able to leverage its capabilities more effectively to help clients manage their funds and process payments worldwide”, says the company in a statement accessed by Funds Society.

The current head of Treasury Management & Payment Solutions, Danny Peltz, a 31-year veteran of Wells Fargo, and will retire on Dec. 15.

“Over Paul’s 21-year career, he has experience at industry-leading global financial institutions and in technology startup environments, focused on delivering the best solutions for clients. He has a deep background in treasury management and payment solutions, which are strategic growth opportunities for the company,” said Pelos.

Meanwhile, Weiss pointed out that Camp brings “valuable expertise” to this role where he will develop a strategy focused on growth and innovation, serving large, medium, and smaller businesses alike. “We are excited to have him join later this year to lead our efforts to enhance products and services that are foundational to our client relationships”, he added.

At BNY Mellon, Camp led an organization that offers global payments, trade services, cash management, and foreign exchange services in 36 countries. Before that, he served as the CFO, treasurer, and EVP of Financial Operations at Circle, a fintech focused on secure technology to use and store money.

He’s also held senior-level roles in transaction services and cash management at both JP Morgan Chase and Deutsche Bank. Camp holds a B.A. in classical studies from Dartmouth College and an MBA from Harvard Business School. During his time at BNY Mellon, he was recognized for his work on diversity, equity, and inclusion issues and looks forward to continuing that work at Wells Fargo.

The Three Most Common Myths about Sustainable Investing

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Pixabay CC0 Public Domain. Los tres mitos más comunes sobre la inversión sostenible

The conversation around sustainable investing, or ESG (environmental, social, and governance) investing has rapidly taken on increased importance. Over the past year, the pandemic has proven the value of incorporating sustainability into corporate practice – and that extends beyond just environmental factors to social and governance policies. By incorporating ESG factors into their corporate structure, companies have not only been able to cope during challenging times, but also now have a social license to continue operating in the future.

Just as the signing of the Paris Agreementⁱ in 2015 to combat climate change was a turning point for global sustainable affairs, the global pandemic is reinforcing structural change. The world is moving toward a stakeholder economyⁱⁱ, where companies seek to serve the interests of consumers, employees, suppliers, and communities as a whole.

More and more people, both globally and locally, are joining the conversation about sustainable investment strategies, and more asset management firms believe it’s important for financial advisors to do the same. The first step is to help guide investors by addressing misconceptions about sustainable investments and ESG.

To do this, we spoke with Jordie Olivella, Head of Distribution and Commercial Strategy for BlackRock’s Offshore Wealth business, to debunk three of the most common myths he hears from clients when it comes to sustainable investing.

Myth 1: Sustainable investing means sacrificing returns

Even before COVID, studies showed that sustainable investing can pay off, but last years’ market volatility was a litmus test, further demonstrating the resilience of sustainable products. Over the course of 2020, companies with better ESG profiles provided resilience in portfolios and outperformed lower-rated peers.

“In the first quarter of the year 94% of a globally representative set of sustainable indices outperformed standard indices. Extend that performance to the whole of 2020, and 81% of that same set of indices outperformed,” points out Jordie Olivella.

Myth 2: There aren’t any standards

It is true that definitions of “what is sustainable” can vary depending upon which investor or investment manager you speak to. At a global level, standardization should take into account three stages, according to BlackRock: the way in which companies report information, methodologies for obtaining an ESG rating, and the classification of financial products. BlackRock uses standardized methods to create indexed products that provide options for investors’ various financial and sustainable goals, from simpler methodologies such as negative screening that only eliminate certain industries to strategies that seek out investments by subject or impact.

“At BlackRock we’re committed to providing investors with full transparency about the sustainable objectives and characteristics for all of our investment strategies. We’re committed to providing the sustainable building blocks of investment portfolios, so that all investors have sustainable options,” says Jordie Olivella.

Myth 3: It costs more to invest with ESG products

Most investors assume it’s more expensive to invest in sustainable products, but that’s not always true. According to BlackRock, the management costs of sustainable funds and ETFs are often equivalent to, and in some cases, lower than standard products.

“iShares sustainable ETFs are on average five times less expensive than actively managed sustainable mutual funds, and as flows into sustainable products continue, these costs will keep falling,” weighs in Jordie Olivella

As the shift to sustainable investing progresses it’s important to understand the facts. Flows into sustainable strategies show no signs of slowing down – according to BlackRock 2020 Global Sustainable Investing Survey, global clients are planning on doubling their allocations into sustainable strategies over the next five years.

“Now is the opportunity to understand the facts behind sustainable investments and get ahead of the demand,” concludes the firm.

The following featured products offer exposure to companies with strong ESG metrics in different geographic areas: iShares MSCI USA ESG Enhanced UCITS ETF (EEDS), iShares Global Clean Energy UCITS ETF (INRG), BGF Sustainable Energy Fund.

i United Nations Framework Convention on Climate Change (2015). Paris Agreement, https://unfccc.int/sites/default/files/english_paris_agreement.pdf

ii Business Roundtable (August 19, 2019). “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans,'” available at https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

In Latin America: this material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds may not have been registered with the securities regulator of Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay or any other securities regulator in any Latin American country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico thus is subject to strict rules. For more information on the Investment Advisory Services offered by BlackRock Mexico please refer to the Investment Services Guide available at www.blackrock.com/mx

Emerging Market Investors Wait for the Right Moment to Deploy Cash

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usd-2874026_1280 — Pixabay CC0 Public Domain. Los inversores de los mercados emergentes esperan el momento adecuado para hacer uso del efectivo

Emerging market (EM) investors are holding high levels of cash in their portfolios, waiting for markets to stabilize before investing in higher-yielding assets, according to HSBC. Its latest quarterly EM Sentiment Survey found that 45% of investors polled have in excess of 5% of their portfolios in cash and 59% don’t expect to deploy it over the next three months.

“Emerging market investors are waiting for the right time to invest because the markets have been gyrating wildly over the past two months. Only last month, the US Federal Reserve turned more hawkish and the focus was on rate rises and tapering and this month the pendulum has swung completely the other way as investors worry about the continued impact of COVID on growth”, said Murat Ulgen, Global Head of EM Research at the firm.

The survey -the fifth of its kind in a series first launched in June 2020- was conducted between 8 June 2021 and 23 July 2021 among 124 investors from 119 institutions representing 506 billion dollars of EM assets under management.

The poll shows that around half of investors are neutral on the prospects for EM countries over the next three months, although 40% are now bullish, up from 34% in the first quarter of the year. Risk appetite (measured on a scale from 0 to 10 where 10 means the greatest willingness to take risk) also rose modestly to 6.17 from 6.04

EM investors are, however, becoming less optimistic on the growth outlook for EM countries over the next 12 months and have, therefore, also downgraded their inflation expectations. The proportion who are optimistic on growth dropped to 60% in the most recent survey, down from 89% at the end of last year, and those expecting inflation to rise dropped to 59% from 77% at the end of the first quarter.

Rates, the biggest concern

Nevertheless, a clear majority of investors (56%) still expect to see higher policy rates across EM countries with many central banks, including those of Brazil, Russia, Hungary and Mexico, already having hiked rates in 2021. “The feeling among investors is that while the growth outlook is dimmer and inflation is less of a concern than at the beginning of the year, EM countries will continue to hike rates because they are trying to pre-empt Fed tightening and avoid a repeat of the taper tantrum we saw in 2013-2014,” commented Ulgen.

The prospect of tightening by the US Federal Reserve was cited by more respondents as a concern than any other issue, ahead of inflation and COVID-19. This is encouraging investors to focus on economies with rapid rate increases. In this sense, Ulgen pointed out that when you fear that global rates are going to rise, “you’re going to be looking for a higher risk premium to invest in the emerging markets as insulation against tapering”.

With expectations for further rate rises in EM countries, 40% of survey respondents expect EM FX to appreciate against the US dollar, up from 22% in April. Those expectations tend to be most bullish in countries that are frontloading rate hikes, notably Russia and Brazil. Similarly, the poll results suggest investors are seeking a higher risk premium in fixed income as well, citing Russia (22% of the total), Nigeria (13% of the total) and South Africa (12% of the total) as the top three markets with a more favourable outlook in local currency debt.

While Asia remains the most favoured investment destination, the net sentiment has declined as investors are focusing on countries that are benefitting from the rise in commodity prices, including Latin America, Middle East and Africa.

Lastly, engagement with environmental, social and governance (ESG) investing continues to rise, with 45% of respondents now running an ESG portfolio either directly indirectly, up from 30% in June 2020. Climate change, inequality, and minority shareholder protection remain the top three ESG concerns respectively.