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Thank you @Ted. A bang-up job as usual. You are so appreciated. You have 11 links here which is great. However, for some who have only limited time, 11 may be more links than they wish to click on and read. I respectfully submit that there's room on this great board both for your awesome posts and those of others. Of course, care needs to be taken to avoid stepping on someone else's remarks. But, a bit of forgiveness needs to be exercised as well. We're all human here (last time I checked).FYI: U.S. stocks were lower on Wednesday as investors rushed to safe-haven assets after President Donald Trump's "fire and fury" warning to North Korea escalated tensions with the nuclear-armed nation
Regards,
Ted
Bloomberg:
https://www.bloomberg.com/news/articles/2017-08-08/japan-stocks-to-follow-u-s-drop-on-trump-threat-markets-wrap
Reuters:
http://www.reuters.com/article/us-usa-stocks-idUSKBN1AP1AB
MarketWatch:
http://www.marketwatch.com/story/us-stock-futures-pull-back-as-north-korea-threatens-guam-2017-08-09/print
IBD:
http://www.investors.com/market-trend/stock-market-today/stocks-recover-to-thin-losses-retail-names-hit-hard/
CNBC:
https://www.cnbc.com/2017/08/09/us-stocks-north-korea-disney-earnings.html
AP:
http://hosted.ap.org/dynamic/stories/F/FINANCIAL_MARKETS_ASOL-?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT
Bloomberg Evening Briefing:
https://www.bloomberg.com//news/articles/2017-08-09/your-evening-briefing
WSJ: Markets At A Glance:
http://markets.wsj.com/us
SPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
SPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectors
Current Futures: Mixed
http://finviz.com/futures.ashx
The evidence is compelling: Sustainable Investing can be a clear win for investors and for companies. However, many SRI fund managers, who have tended to use exclusionary screens, have historically struggled to capture this. We believe that ESG analysis should be built into the investment processes of every serious investor, and into the corporate strategy of every company that cares about shareholder value. ESG best-in-class focused funds should be able to capture superior risk-adjusted returns if well executed.
This is the key finding of our report in which we looked at more than 100 academic studies of sustainable investing around the world, and then closely examined and categorized 56 research papers, as well as 2 literature reviews and 4 meta studies – we believe this is one of the most comprehensive reviews of the literature ever undertaken.
Frequently, Sustainable Investing is stated to yield ‘mixed results”. However, by breaking down our analysis into different categories (SRI, CSR, and ESG) we have identified exactly where in the sprawling, diverse universe of so-called Sustainable Investment, value has been found.
By applying what we believe to be a unique methodology, we show that “Corporate Social Responsibility” (CSR) and most importantly, “Environmental, Social and Governance” (ESG) factors are correlated with superior risk-adjusted returns at a securities level. In conducting this analysis, it became evident that CSR has essentially evolved into ESG. At the same time, we are able to show that studies of fund performance – which have been classified “Socially Responsible Investing” (SRI) in the academic literature and have tended to rely on exclusionary screens – show SRI adds little upside, although it does not underperform either. Exclusion, in many senses, is essentially a values-based or ethical consideration for investors.
We were surprised by the clarity of the results we uncovered:
100% of the academic studies agree that companies with high ratings for CSR and ESG factors have a lower cost of capital in terms of debt (loans and bonds) and equity. In effect, the market recognizes that these companies are lower risk than other companies and rewards them accordingly. This finding alone should put the issue of Sustainability squarely into the office of the Chief Financial Officer, if not the board, of every company.
89% of the studies we examined show that companies with high ratings for ESG factors exhibit market-based outperformance, while 85% of the studies show these types of company’s exhibit accounting-based outperformance. Here a gain, the market is showing correlation between financial performance of companies and what it perceives as advantageous ESG strategies, at least over the medium (3-5 years) to long term (5-10 years).
The single most important of these factors, and the most looked at by academics to date, is Governance (G), with 20 studies focusing in on this component of ESG (relative to 10 studies focusing on E and 8 studies on S). In other words, any company that thinks it does not need to bother with improving its systems of corporate governance is, in effect, thumbing its nose at the market and hurting its own performance all at the same time. In the hierarchy of factors that count with investors and the markets in general, Environment is the next most important, followed closely by Social factors.
Most importantly, when we turn to fund returns, it is notable that these are all clustered into the SRI category. Here, 88% of studies of actual SRI fund returns show neutral or mixed results. Looking at the compositions of the fund universes included in the academic studies we see a lot of exclusionary screens being used. However, that is not to say that SRI funds have generally underperformed. In other words, we have found that SRI fund managers have struggled to capture outperformance in the broad SRI category but they have, at least, not lost money in the attempt.
These conclusions go a long way towards explaining why the concept of sustainable investing has taken so long to gain acceptance and even now inspires indifference and even cynicism among many investors. It has been too closely associated for too long with the SRI fund manager results which are not only an extremely broad category (i.e. in terms of investment mandate), but historically were based more on exclusionary – as opposed to positive or best-in-class – screening. ESG investing, by contrast, takes the best-in-class approach. By analyzing the various categories within the universe of sustainable investing, we can now say confidently that the ESG approach, at an analytical level, works for investors and for companies both in terms of cost of capital and corporate financial performance (on a market and accounting basis). It is now a question of ESG best-in-class funds capturing the available returns.
Yes. Sometimes you succeed simply by being first to the party. However, I always dream of the day when they will be "Blockbustered" or "Kodaked". To be realistic however, they might only be "Philip Morrissed" and will continue to exist even after nuclear winter, right after death, taxes and cockroaches.If there is a way to make money, rest assured M* will do it. Sadly, I believe that is the most important thing for them. We should accept this fact, whether or not there is a conflict of interest. It's always about money. They are not going to enter this new business line if they expect to lose money. M* never does that. Unfortunately, they are pretty much the one source for the detailed analytics so many of us need (or think we need).
China flies nuclear bomber over South China Sea as a 'message' to Donald Trump© 2015 Mutual Fund Observer. All rights reserved.
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