ESG (environmental, social and governance) and SRI (socially-responsible investing) investing have gone from buzzwords to very in-demand investment themes. Indeed, an increasing number of high-net-worth investors are gravitating toward the idea that they can better align their investments with their values. After all, many of these same people are already incorporating sustainable practices in other areas of their life, such as food, energy, recycling, transportation, etc., so it’s no surprise that when it comes to their investments, everyone is talking about ESG and SRI.
“We learn from every experience, and our accumulated experiences are guiding us through the current market challenges.”
ESG (environmental, social and governance) and SRI (socially-responsible investing) investments are terrific ways to help clients align personal values with investments. Women and younger investors, both beneficiaries from a transfer of wealth, are driving strong demand and the number of ESG/SRI investment managers has ballooned in size over the past decade. Those seeking ESG/SRI options now have a plethora of providers to choose from, which makes the process of vetting money managers that much more important.
Envestnet VP of Impact Investing, Brett Wayman and Doug Classen, SVP of Dana Investment Advisors discuss how to research ESG/SRI managers, how to talk with current clients about ESG, and how RIAs can find new clients. Hint: have you reached out to the small institutions in your own backyard?
In the U.S., mutual funds have been around, in one shape or another, since the early 20th century. However, it wasn’t until the bull markets of the 1980s and 1990s when this investment vehicle became more of a household name for retail investors. The diversified nature of these funds was a major selling point compared to owning a handful of individual stocks and/or bonds. After the bursting of the tech bubble in the early 2000s, asset flows slowly started shifting from mutual funds toward passive index products like ETFs, and this trend was clearly exacerbated after the Global Financial Crisis in 2008, as shown by the graph below.
At the end of the third quarter, large cap growth stocks (Russell 1000 Growth Index) were outperforming their value counterparts (Russell 1000 Value Index) by over 10%. Since then, value stocks have made a comeback on a relative basis as shown by the graph below.
Happy New Year!
It's hard to believe another year is in the books. Below we highlight our most popular blog posts from 2018. We hope you have enjoyed reading our blogs as much as we have enjoyed writing them for you.
-The Dana Funds Team
While everyone was busy talking about FAANG stocks driving the market higher this year, small caps were flying even higher, outperforming large caps by over 5% throughout most of the summer. However, as investor sentiment cooled and volatility returned in a big way, “risky” assets like small caps have taken it on the chin.
Names like Facebook, Apple, Amazon, Netflix and Alphabet dominated headlines for much of 2018, as did other high-growth large-cap companies like Tesla. Many investors were concerned over the low market breadth, meaning the small concentration of stocks moving the overall market higher. Meanwhile, as illustrated by the graph above, small cap stocks (Russell 2000 Index) were on a tear and probably didn’t get the attention they deserved.
Since the wave of new ESG (environmental, social and governance) specific and larger well-known data vendors rolled onto the ESG data scene, it has become more difficult for investors and asset managers to find any high-level of correlation between vendor ESG scores. In this blog we discuss some of the possible reasons for the differences in scores across companies and how users of these ratings might navigate these challenges to drive mission alignment, risk mitigation and alpha generation.
DANA INVESTMENT ADVISERS WINS FIRST PLACE (MONEY MANAGERS WITH 20-49 EMPLOYEES) IN PENSIONS & INVESTMENTS BEST PLACES TO WORK IN MONEY MANAGEMENT AWARD
New York, NY (December 10, 2018) – Dana Investment Advisers won the first place in money managers with 20-49 employees in the 2018 Best Places to Work in Money Management awards announced by Pensions & Investments today.
Presented by Pensions & Investments, the global news source of money management, sixth-annual survey and recognition program is dedicated to identifying and recognizing the best employers in the money management industry.
Large- and small-cap indices have fallen significantly since the end of September, in a correction that has caught many investors off guard. Recent darlings, such as Amazon and Netflix, fell over 20% and 30%, respectively, before finding support.
However, we really shouldn’t be surprised when stocks with P/E’s of 50 to 100 and year-to-date returns of 50% to 100% undergo a correction. These stocks should be expected to exhibit downside volatility that is similar to their upside volatility when their future growth rates are questioned. High P/E stocks are most sensitive to changes in their expected growth rates in the future. Also, all market trends typically both overshoot and undershoot their natural equilibrium points.