CAMRADATA’s latest whitepaper, Sustainable Multi Asset explores where investors have found returns for their multi-asset portfolios, whilst balancing sustainability and the move away from oil and gas companies.
The whitepaper highlights insights from firms including Baillie Gifford, M&G Investments, PineBridge Investments, Cambridge Associates, Cardano and Mercer who all attended a roundtable recently hosted by CAMRADATA.
The report begins with a discussion on the choice of benchmarks for different multi-asset strategies, as well as objectives for volatility and sustainability. It goes on to consider whether the sharp losses across asset classes this year had clients challenging longer-term objectives.
Other topics include currency volatility, with managers explaining they had suffered because most foreign investments, notably those expressed in U.S. dollars, were hedged back to sterling during a challenging year, and ESG initiatives.
The report concludes with a discussion on positive impact and sustainability. A panellist highlighted that the performance of traditional and sustainable multi-asset strategies has been almost identical this year, but sustainable products remain valid for other reasons. Sustainability analysis is a way of complementing views on markets.
Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “As multi-asset has developed, managers have increased their sources of return and diversification, including some absolute return strategies; exposure to private markets and real assets. Demonstrating the effectiveness of greater diversification though can be challenging.
“Many consultants divide multi-asset into two categories: a collection of diversified betas and a collection of absolute return strategies. Managers that are broadly long-only but actively manage securities within each asset class need to prove that both elements – diversification by asset class and active management – are adding value.
“They also need to consider sustainability. Many evangelists for ESG and rapid portfolio decarbonisation could point to the underperformance of the energy sector over the last decade. But that argument has not held recently, as there is more accommodation this year of Big Oil, or at least those showing a willingness to pivot towards sustainable products.
“The big question for investors going forward is how far they can tolerate financial losses as they try to make their portfolios greener and more responsible.”
To read the Sustainable Multi Asset whitepaper, please click here.
For more information on CAMRADATA visit www.camradata.com.