“Who should decide your ESG strategy, is the fundamental question?” This was said to Spy by an equity ESG portfolio manager from Paris this week over a cortado or two. He was in Hong Kong for a visit. “Should it be the government, your asset manager, your portfolio manager or the youthful activist gluing herself to the motorway.” His fundamental point was a good one – the opacity, inconsistency and the, at times, contradictory nature of the ESG market, means that confusion reigns supreme at the moment. For what it is worth, this really bright chap felt government was the key one. He was craving a tougher line from governments around the world which levelled the playing field. Good luck with that was Spy’s response.
What if your investment style becomes a global marketing idea? Spy is a little sceptical that this will ever work, but the people at Leverage Shares clearly think otherwise. The firm has launched an ETP in Europe, named the Buffettique Growth Strategy, that claims it will invest in Warren Buffett’s style. Just for good measure, the strategy does invest in Berkshire Hathaway but then adds a dollop of other funds, such as Scottish Mortgage Trust and Finsbury Growth & Income Trust, which also invest in ‘wide moat’ companies. For the privilege of having chosen these widely available funds, investors are expected to cough up 1% per annum. Now Spy may be an old-fashioned fellow, but he wonders why not just buy Berkshire Hathaway itself? Then you get Warren Buffett, not just his style. It also costs you nothing but a few dollars in brokerage. Still, a sucker born every day it seems.
Across crypto land last night, there must have been digital asset enthusiasts choking on their noodles. It emerged yesterday that BlackRock has filed an application to list a Bitcoin ETF. Famously, Larry Fink, BlackRock’s CEO, said in 2017, Bitcoin is an ‘index of money laundering’. Not exactly a ringing endorsement. Larry, along with Jamie Dimon of JP Morgan, were the most prominent financial leaders to publicly show scepticism about the digital asset space. Is this a case of, if you can’t beat ‘em, join em? Grayscale, a pioneer in the listed digital token space, will be screaming blue murder if the application is approved by the SEC. It has, for years, been rebuffed by the regulator in the US on various grounds.
Britain’s largest asset manager is coming to Singapore. Legal and General Investment Management, LGIM to its friends, has indicated it is going to open an office in the Lion City. The firm currently manages about £1.2trn ($1.53trn) in AuM. The British giant has not indicated how many staff it will place in the office or which strategies it might start promoting. In the UK, LGIM is a prominent retail player backed by its huge insurance operation but has a reputation as a strong institutional investor. Legal and General’s Future World Global Equity Index is up 40%, in GBP, in the past 3 years.
Are you enjoying MANTAMA’s revenge? For the unvitiated, this is when Meta, Amazon, Nvidia, Tesla, Alphabet, Microsoft and Apple stocks roar (or soar) and every other company stays pretty much flat. The buoyant return in the US markets has pretty much all come from this handful of tech(ish) companies. With the S&P 500 as a whole sitting on a price-to-sales ratio of 2.4, the market is very generous to the mighty seven. By comparison, MANTAMA’s price-to-sales ratios: NVIDIA: 42, Microsoft: 12, Tesla: 10, Apple: 7.7, Facebook: 6.3, Netflix: 6.3, Google: 5.7, Amazon: 2.5. Priced to perfection.
Is the CFA still a decent qualification? Spy is a big believer in education and absolutely nothing is ever wasted, but for the effort and make no mistake it is a massive effort to get those letters, the commercial and career edge may be evaporating. Spy came across this remarkable chart. It highlights the growth in CFA charter holders over time and the rise of its analytical enemies: data technology, fund indexing and now AI. Of all of these, the single greatest threat is still probably fund indexing. As we all know, it is “hard to beat the market” and, in effect, all these analysts, through their work, kind of ‘become the market’, making it self-evident they can’t ‘beat it’. Time to look for a new edge, perhaps?
Wandering around Singapore a few weeks ago, Spy was struck by how many Japanese cultural references abound. From restaurants to shops, Japan seemed to be everywhere. In the financial world, Spy has seldom heard so much enthusiasm for the Land of the Rising Sun of late, too. Anecdotal, sure. Financially interesting, quite possibly.
If you were unfortunate enough a few years ago to travel to California and endure an evening with smug early 30-somethings, you may have come across starry-eyed evangelists for FIRE. It stood for Financial Independence, Retire Early. This rather idiotic dream rested on two silly ideas: 1) That work itself is neither fun nor fulfilling. In Spy’s experience it is both, perhaps not all the time, admittedly. 2) That living ultra-frugally for a few years to build a slightly bigger nest egg in your early thirties would be enough to provide sufficient cash to live well for the rest of your life. Most people, by comparison, struggle to save enough by their mid-sixties to have a generous, and far shorter, retirement. So, Spy was amused to see the US’s latest youth labour participation. It is back to near record highs. 84% of Americans aged 25-54 are gainfully employed. FIRE, not a blinking chance.
Until next week…
