HEAD-TO-HEAD: Ninety One versus Pictet

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Darius McDermott, managing director of Chelsea Financial Services and FundCalibre

Introduction

ESG has hardly been flavour of the month lately as sustainable strategies have been hit by a double whammy this year, largely missing out on the energy stock rally and taking losses from their weightings of technology stocks.

This represents a sharp reversal of recent years, in which money has flowed into sustainable strategies, largely thanks to their correlation with grow stocks, which has led to a significant outperformance compared with most indices.

Despite the battering ESG funds have taken this year, there is still compelling evidence that those companies that ignore ESG factors tend to fare worse over the long term. According to Federated Hermes research, this holds up for all sectors except real estate and energy.

From a policy perspective, ESG is not going away either. Only a few days ago at COP27 in Egypt, the UN’s climate change executive secretary Simon Stiell said it was vital that governments prioritised the climate crisis over other things such as the cost of living crisis.

“The fear is other priorities take precedence. And they are important, but not one single crisis is more impactful and critical than climate change,” he said.

COP27 also marks the first time that delegates agreed to discuss compensating poor nations for actions by developed economies that have led to global warming, underscoring the momentum for addressing the climate crisis.

Against this backdrop, Darius McDermott, managing director of Chelsea Financial Services and FundCalibre selected two ESG funds for this week’s head-to-head – the Ninety One Global Environment fund and the Pictet Global Environmental Opportunities fund.

Source: FE Fundinfo, Morningstar. (Data in US dollars, 10 November 2022)

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