Two-thirds of surveyed fund buyers – responsible for selecting funds for private bank, insurance, fund-of-fund and other retail investment platforms – say they will increase their allocation to ESG strategies in 2019; with more than half (57%) saying that there is alpha to be found in ESG investing. The results were recorded in a poll of 200 fund buyers by Natixis Investment Managers.
The survey also indicates broad expectation among the fund buyers surveyed that incorporating ESG factors in asset management and fund production will become the norm: 67% said they thought that it would be standard practice for all investment managers within five years.
And half (49%) believe that ESG factors are important in their organisation’s current manager selection process.
The fund buyers say they are increasingly incorporating ESG considerations into investment decision-making and analysis to align investment strategies with their organisational values. However, they raise a number of concerns including the conflict between short-term return goals and long-term sustainability objectives, a lack of demonstrated performance track records and fears that companies may be “greenwashing” to enhance their public image.On broader market themes, more than half (58%) of the fund buyers said rising interest rates were their top portfolio risk in 2019, with 78% of fund buyers expecting interest rates to go up during the year.
Three quarters (84%) of those surveyed said they expected increased volatility in equity markets in 2019.
Almost two-thirds (60%) of fund buyers believe that regulation, put in place after the financial crisis, has done little to mitigate current and future market risks.
RI is holding its ESG in Manager Selection Workshop on June 11 – one of the side events to the RI Europe 2019 conference (June 11/12). The Workshop will feature case studies from asset owners and other institutional manager selectors explaining how they incorporate ESG into their decisions when awarding mandates and monitoring the successful managers across different asset classes.
Click to see the ESG in Manager Selection Workshop agenda