The FSA Spy market buzz – 22 November 2024
Dimensional excludes the Middle Kingdom; JP Morgan’s optimistic outlook; Household wealth is rocketing; Schroders is thinking about privates; Ninety One’s pithy AI; German woes and much more.
HEAD-TO-HEAD: JP Morgan vs Robeco
FSA compares the JP Morgan Asia Equity Dividend Fund with Robeco Asian Stars Equities Fund, which incorporates ESG in its process.
Robeco Asian Stars Equities Fund has a clearly stated ESG integration policy. Focusing on corporate governance, it engages in active ownership practices: proxy voting and engagement on ESG issues with companies.
The fund manager pays attention to protection of minority shareholders, presence of independent directors on a company’s board and the quality of the audit committee.
Robeco integrates ESG criteria into the investment process and into its operations.
When considering the impact of ESG integration on fund performance, Ng noted that it would be difficult to assess considering the fund’s relatively short track record.
In principle, ESG integration should “help manage specific risks of companies, while focusing on long-term performance,” he said. “Business models should be more sustainable.”
Madhu Gayer, head of investment analytics for Asia at BNP Paribas Securities Services, told FSA that the time horizon for measurement of impact on corporate governance practices can be as high as five years.
“If the investor and the company mutually agree to work on changes to support the move to a more sustainable business model, often these changes are not possible to execute in a short-term time horizon,” he said.
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