Amid ESG Fund Proliferation, Advisors Must Be Mindful of Fit

Posted by Dana Funds Investment Team on Jul 9, 2020 11:12:14 AM

ESG interest is growing and as asset flows follow, so too are the number of strategies dedicated to the space. For investment advisors, that makes the job of matching client objectives with the right strategy increasingly difficult.

In a recent Q&A session, Dana portfolio managers touched on the issue, and where their own ESG fund may – or may not – fit within a portfolio. A brief excerpt from the interview explains:

Read More

In 2020, ‘S’ and ‘G’ Become Bigger Part of ESG Focus

Posted by Dana Funds Investment Team on Jun 19, 2020 10:02:10 AM

Prior to 2020, the environmental aspect of ESG (Environmental, Social and Governance) investing has garnered the most attention from interested investors. But a global pandemic has thrust social and governance considerations into a larger spotlight. As an ESG manager, we applaud this change.

At Dana, we have always given equal attention to the environmental, social and governance issues that pose risks to a business. So do many seasoned ESG portfolio managers. While a company’s environmental footprint remains an important component of that analysis, we are glad to see more end investors realize that companies have an active role to play in other societal issues. The COVID-19 pandemic has laid bare some of the deeper issues that companies must address.

Read More

Health Care Sector Calls for Valuation Discipline

Posted by Dana Funds Investment Team on May 14, 2020 12:29:28 PM

Innovation within the biotechnology, medtech and diagnostics industries makes the health care sector an exciting area to invest. Valuations also make it precarious.

At Dana funds, we have balanced the risk and opportunity within the sector with a steadfast focus on valuation discipline. We are investing in innovation within the sector – but at what we believe is a reasonable price. We also find opportunity with companies that have simpler stories, but nevertheless benefit from long-term, secular tailwinds affecting health care.

Stocks within both camps have been large contributors to performance over the past year, and are a primary reason stock selection within the health care sector has contributed to relative performance for our Epiphany Fund.

Read More

Clearing Up the ABCs of ESG

Posted by Dana Funds Investment Team on May 7, 2020 5:33:28 PM

While ESG interest is undoubtedly on the rise, the category hasn’t reached its full growth potential. One issue potentially holding it back? Clarity.

An October 2019 report from the Institute of International Finance1 found that financial firms are using nearly 80 different terms to describe various forms of sustainable investing. As the report describes, this is creating confusion for would-be investors:

“At best, this confusion makes it hard to compare investment products and for clients to understand the differences in offerings,” the report states. “At worst, it facilitates greenwashing—intentionally misleading investors or giving them a false impression about how well their investments are aligned with their sustainability goals.”

Read More

Why is ESG Investing Important?

Posted by Dana Funds Investment Team on Feb 13, 2020 3:54:59 PM

In our last two blogs on environmental, social and governance (ESG) investing we discussed the what and how of ESG investing.  In our final blog of the series we are going to explain why ESG investing is important for investors and for the future of the entire investment landscape. 

The adoption of ESG investment criteria in the investment community has hit a critical mass. Today, funds employing some form of sustainable investing strategy hold 25% of a company shares1 

Read More

How Are ESG Funds Managed?

Posted by Dana Funds Investment Team on Feb 6, 2020 3:01:07 PM

There are a variety of styles in which environmental, social and governance (ESG) funds are managed.   As with classic fund investing, the typical ESG fund manager will consider traditional investment metrics incorporating factors such as valuation, growth, earnings and balance sheet health.  In addition to these financial metrics, the manager will incorporate an array of ESG metrics into the investment process, analyzing factors that include:

Environmental: pollution, consumption and disclosure 

Social: tobacco, labor practices, gambling, pornography, weapons 

Governance: board independence, CEO compensation, auditing processes 

Faith-based: abortion, contraception, alcohol

Read More

What is ESG?

Posted by Dana Funds Investment Team on Jan 27, 2020 7:06:36 PM

Environmental, social and governance (ESG) investing is all the rage. When Dana Investments started our first ESG fund at the turn of the century, the total market size for ESG strategies was only $2 trillion. At the start of 2018, ESG strategies accounted for an astounding $12 trillion in investable assets! However, despite this robust demand, an air of ambiguity still hovers over the ESG marketplace. Investors are hearing about these funds and clearly want to know more. 

ESG, SRI (socially responsible investing), RI (responsible investing) and faith-based funds all fall under the umbrella of impact investments. The mandate for these funds is to consider the impact that corporate behavior has on shareholders, stakeholders and society. Impact investors not only want their returns, they want their returns to matter.

Read More

Fully Invested? Here?

Posted by Dana Funds Investment Team on Jan 24, 2020 1:47:36 PM

 

Index 2019 Return
CRSP US Total Market Index  30.84%
FTSE All-World Ex-US Index  21.81%
BloomBarc US 5-10 Year Credit Index 13.90%

 

The index returns above are a snapshot of the robust returns for financial assets in 2019.  These returns were buoyed in the second half of the year with the reversal of two investment headwinds: interest rates and trade. The Federal Reserve lowered the Fed Funds rate by 0.75% while the U.S. and China made progress in their tenuous trade dispute. The gains in the equity market averages were accompanied by lackluster 3.5%* earnings growth. As a result, market valuations appear stretched.  Entering 2020 the Case Shiller P/E ratio is 31.19, a level of valuation exceeded only in 1929 and 1999.

Read More

What Should We Expect from Equity Markets During Presidential Election Years?

Posted by Dana Funds Investment Team on Jan 16, 2020 9:59:26 AM

In case you somehow have not yet heard, 2020 is a presidential election year. In November, we Americans will go to the polls and collectively determine whether President Trump has earned another four years in office, or if we would be better served by the chosen Democrat candidate. While the race is sure to be hotly contested and the ad dollars good for network and social media bottom lines, what, if anything, does a presidential election portend for equity markets?

Read More

Correlation between ESG & Company Culture

Posted by Dana Funds Investment Team on Dec 18, 2019 4:43:55 PM

In his inaugural address on January 20, 1977, President Jimmy Carter extolled that the nation, “must adjust to changing times and still hold to unchanging principles.”  At times it seems we are living in a Moore’s Law-ian period of constant change.  In finance, this change has lowered costs for passive, index-based investors, shepherded the advent of quantitative analytics, and enabled investors to efficiently expand analytical horizons.

This expansion has helped usher Environmental, Social and Governance (ESG) investing criteria into the investment mainstream. According to The Forum for Sustainable and Responsible Investment, $12 trillion, or one-fourth of all US-based professionally managed assets, use ESG criteria in their analysis.  While there are studies that show consideration of these factors have led to better returns, the increased adoption of ESG criteria should be celebrated because we believe it fosters better corporate behavior.

Read More

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.