HEAD-TO-HEAD: Abrdn versus Alquity

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Louise Liu, Oreana Portfolio Advisory Service

Introduction

As the global economy experienced an 18-month run of shutdowns, lockdowns, and supply chain disruptions, ESG investing has racked up impressive numbers.

Record sales in the fourth quarter of 2020 totalled $152bn, and total assets invested worldwide reached $1.6tn according to Morningstar. By the fourth quarter of 2021 ESG strategies were on a winning streak in which the S&P 500 ESG index outperformed the S&P 500 by 3.7% for the three years ending 3 October 2021.

A survey conducted by Natixis Investment Managers showed that 22% of individual investors in Asia and Europe have ESG investments. Just over half of those in Asia say they’re interested, including 58% in Hong Kong and 56% in Taiwan.

“In Asia demand for ESG is coming from all segments of investors in all the markets in which we operate, it’s a daily conversation now,” Fabrice Chemouny, head of Asia Pacific for Natixis Investment Managers, told FSA.

Globally, the high expectations investors hold for themselves, policy makers, and private companies extend equally to the asset managers who run their investments, the survey showed.

ESG integration is top of the mind for a majority of investors, as three-quarters expect their fund managers to look at more than the financial aspect of a company when researching an investment. Investors also expect active ESG management with ongoing investments, as more than half (55%) believe fund managers should sell out of companies with poor ESG records.

Following the introduction of the European Union Sustainable Finance Disclosure Regulation (SFDR) 0 March 2021, the number of sustainable funds captured in the global sustainable universe has grown by 51% over the third quarter of 2021, Morningstar Direct data shows.

Mainly driven by SFDR in Europe, global sustainable fund assets almost doubled in the past six months to reach $3.9tn at the end of September 2021.

“Investors want both value and values, and now that ESG investments have been seen to perform as well as non-ESG investments, there is only one path to choose.  And it’s no longer just an ESG overlay, investors want it fully integrated into the investment process,” Natixis’s Chemouny said.

Against this background, FSA asked, Louise Liu, investment strategist at Oreana Portfolio Advisory Service, to select two global sustainable equity products for comparison: the Aberdeen Global Sustainable and Responsible Investment Equity Fund and the Alquity Global Impact Fund.

Source: FE Fundinfo, Morningstar. (Data in US dollars, 29 Jan – 26 Nov 2021)

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