HomeRI ResourceAXA Investment ManagersESG investing: Why we believe an active approach is optimal
Research and White Paper

The ‘active versus passive’ investing debate is well documented and has rumbled on for years. However, when it comes to investing from an environmental, social and governance (ESG) perspective, we firmly believe active investing is the optimal route.  

Active investment management is fundamentally about aiming to deliver a better outcome than that provided by simply investing in a strategy tracking a market index. When active management succeeds it can deliver index-beating returns with hopefully lower volatility.

To generate that outcome, active managers create diversified portfolios by investing in securities based on fundamental or factor analysis rather than by sizing allocations based on the individual weights of securities in a benchmark index. The allocation decisions can be driven by macro, valuation, style and thematic factors.

In contrast, passive strategies give no consideration to a company’s individual fundamentals or their relative value, and if the market falls, so do they.

CATEGORIES: Environmental Investment Style: ESG