While the U.S. economy continues to rebound, the Delta variant remains a wildcard to growth potential in the coming quarters. With the virus on everyone’s minds, we wanted to provide you a front row seat to what management teams are saying about the variant, and how it is affecting their business or the broader economy.
Confused by all the various ESG nomenclature? You’re probably not alone. By some counts, as many as 80 different terms are used to define ESG investing. *
Amid the alphabet soup, advisors can establish themselves as a trusted guide for interested investors. Our newest ESG FAQ can help.
Are ESG strategies more about the companies you avoid, or the companies you change? It’s a key difference among ESG funds, and could be a key difference in what your clients want from ESG investing.
Some strategies are focused more heavily on exclusionary investing – using ratings and screens to “weed out” companies that have a heavy carbon footprint or score poorly on other social or governance metrics. Simply avoiding those companies may in fact be the approach your client wants.
Editor’s note: Our health care sector outlook is part of a regular series sharing our views on various sectors. It’s part of our efforts to increase communication with investors at a time of economic and market uncertainty. While the sector outlooks provide a short overview of our thinking, we invite you to contact us if you are interested in a deeper discussion.
In a sector as large and diverse as health care, only one sweeping statement can be applied across the entire investable universe: Fundamentals are at an inflection point.
As more assets flow into ESG strategies, the space has had an impact on several facets of society, with a new mega-trend every year. In a recent call with clients, Portfolio Manager Duane Roberts reflected on where ESG trends have already taken us, and where they are going:
Duane Roberts: “I'll go back three years, and it seems like every year there's a new theme in ESG. Three years ago, it was transitioning away from fossil fuels and what's the pathway to get there, and how does our portfolio align with those projections, and are the companies in the portfolio making the changes necessary. Last year for some fairly obvious reasons, diversity equity, and inclusion, which was always a subject of concern for ESG, jumped from being one of the topics to being the top topic.
For the past several months, market pundits have directed much of their focus on a single topic: Inflation. But many news articles and conversations are void of perspective. In a wide-ranging roundtable discussion, Dana Investment Advisor’s portfolio managers shared their views on inflation, including why moderate inflation is OK for markets and the economy, why excessive inflation like the 1970s is unlikely, and what investors should be thinking about in an era of reasonable price increases. A synopsis of their discussion follows:
With a 20-year history in ESG investing, Dana was one of the earliest entrants in the space. It all started with the request of a group of nuns. In a recent conference call on ESG investing, Dana portfolio managers shared how it all began:
Many ESG strategies enjoyed a strong performance relative to their benchmarks in recent years. Much of it was due sector exposure. Simply put, many ESG strategies were overweighted growth-oriented technology companies, which score well in ESG ratings and analysis due to their lower carbon footprint.
In May, an activist investment firm won three seats on Exxon Mobil’s board, marking one of the most expensive, and most closely watched, proxy fights in America. It was a big victory for a small activist investor owning only a fraction of Exxon’s total shares.
It also marked a victory for ESG investors. The activist firm, a hedge fund called Engine No. 1, relied on ESG-friendly institutional investors and ESG fund managers to secure enough votes to elect the new board members, who will encourage Exxon to pivot its business away from fossil fuels.
Lower quality stocks have outperformed higher quality companies for much of the past year, helped by access to cheap debt and anticipation of an economic rebound. But that may be changing.
The Dana Funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC. and the firms referenced in this blog post.