Invest
The upsides and downsides of investing with heart
“Environmental, social and governance” investing is becoming a more popular consideration for savvy investors, and there are good and bad elements to investing with a social purpose.
The upsides and downsides of investing with heart
“Environmental, social and governance” investing is becoming a more popular consideration for savvy investors, and there are good and bad elements to investing with a social purpose.
Contrary to popular belief, Alex Duffy, portfolio manager for Fidelity International, believes ESG is more than just a buzzword. He says it is inseparable from basic fundamental analysis of modern-day investing.
This is especially true when investing in a highly volatile foreign markets, or emerging markets, where corporations are more likely to act in political or self-interest.
Mr Duffy believes taking a look at ESG is the same as fundamental research investors undertake.
“So when investors talk about fundamentals and returns of business, what they are really talking about is the sustainability of the profit profile of a company. So, what does it do? Does it have an advantage? And what is the value of the product to the end-user? Why can’t another company do it cheaper? If the answer to that is because this company achieves this profit by exporting child labour at a low cost, then that is an unsustainable cash flow profit. So that level of profitability is not sustainable," he said.
“We can think about sustainability in social implication, environmental implications or we can think about it in the form of a competitor that will come into the market with a more innovative product, but I don’t think you can differentiate between fundamental research in the traditional sense and disaggregate sustainability from that,” said Mr Duffy.
Will the term ESG exist in 5 years?
Mr Duffy believes the term itself will not be around in five years’ time, because it will be a regular part of research investors do.
“At the end of the day, we are trying to achieve long-term financial outcomes that meet the goals of our investors, and there will be a balance of environmental, social and governance outcomes that go to what is a successful outcome. The term ESG will be totally redundant in five years’ time because anyone that tells you they are an unsustainable investor, which is the other side of the coin, doesn’t make sense,” Mr Duffy said.
This email address is being protected from spambots. You need JavaScript enabled to view it.
About the author
About the author
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
