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US ESG (Environmental, Social and Governance) investors are increasingly likely to benefit as the country’s companies close the gap with best-in-class global companies on ESG disclosure and performance. The trend towards ESG in the United States is being driven by asset owners demanding ESG integration into corporate business strategies, investors using it as a source of alpha1, and regulators looking to formalize ESG into its rules and protocols. A growing body of empirical evidence suggests that companies with improving ESG momentum have been correlated with positive risk-adjusted returns.
Head of Equity Research, US Director of Core Equity, Portfolio Manager
In the current environment of heightened uncertainty, managing a multi-asset portfoliohas rarely looked as complex as it does today, especially for those investors looking for an appropriate governance model on which to take investment decisions.The issue is not only to make accurate market forecasts and formulate appropriate investment views, but also to construct an efficient portfolio based on these views within a given risk budget.
Matteo GERMANO, Shane MCDONALD, Matteo ORTISI, Eric TAZE-BERNARD, Claudia BERTINO, Massimiliano MATRAIA, Lorenzo PORTELLI, Nuria TRIO
The ongoing Covid-19 crisis and the resulting market turmoil have confirmed a pre-existing trend within equity investing: the increasing relevance ofintegrating ESG criteria andsustainability into the investmentdecision. We believe doing so will add value both in terms of being able to deliver better risk-adjusted return, but also in terms of helping to put focus on - and ultimately improve - important ESG parameters for companies and society.
Kasper ELMGREEN, Piergaetano IACCARINO
As you construct and monitor client portfolios, we hope you find our Blue Paper informative, insightful and rather complementary to your ongoing due diligence and asset allocation endeavors – both for the balance of 2020 and in the long-run. Recognizing the presence of potential constraints you might encounter through the lens of existing investment guidelines, the composition of your benchmarks, regional exposures, or investment styles, we believe the findings of our research suggest the consideration of US equities for inclusion in either regionally or globally-focused portfolios, to help raise the odds of longer-term risk-adjusted outperformance in client portfolios. The latter is informed by our analysis and what we deem secular—rather than merely cyclical— tailwinds for US equity markets.
Craig STERLING, Marco PIRONDINI
The global outbreak of Covid-19 has brought the world and its economy to a standstill, highlighting the importance of sustainable and resilient infrastructure (healthcare, water, power, telecommunications). Countries with fragile infrastructure have less capacity to handle crises, so they will need to increase their infrastructure investments. This is especially crucial in the context of health security and rapid urbanisation.
Global Head of EM
Cyclical conditions are turning more positive for Europe. Easing geopolitical risk and the prospect of massive fiscal resources (national and EU-wide) and monetary support could support a recovery in 2021. The improved sentiment could benefit European assets, equities in particular, that have been a laggard due to the pandemic. This could lead to a catch up of EU equities in relative terms vs other markets.
Pascal BLANQUE, Vincent MORTIER
The Covid-19 crisis now appears to be deeper and more widespread than initially estimated by financial markets, and it is placing a huge strain on the global economy. In this new and evolving context, real estate is likely to share in the economic pain in the short run, but could prove resilient in the longer term given its defensive features, including its ability to dampen volatility and bring diversification to portfolios.
Pedro Antonio ARIAS
Global Head of Real & Alternative Assets
An increasing number of institutional investors have adopted a total portfolio approach (TPA) as a response to the weaknesses of more traditional strategic asset allocation (SAA)-based methodologies. We believe the current crisis will reinforce this trend, as it is probably marking a paradigm shift in financial markets. This shift could be as important as the change in US monetary policy brought in by Federal Reserve Chairman Paul Volcker at the beginning of the 1980s, which led to a long period of disinflation, lower interest rates and high asset returns.
Eric TAZE-BERNARD, Matteo GERMANO