According to Morningstar, the context of rising energy costs and the politicization of ESG investment structures have influenced financial operators.
The panorama of socially responsible investments is optimistic. Although sustainability-focused funds saw outflows in the three quarters that ended this year, fund managers with ESG criteria (environmental, social and corporate governance) maintain a positive outlook for 2024.
According to Morningstar, the backdrop of rising energy costs and the politicization of ESG investment structures have influenced financial operators.
However, ESG-oriented asset managers are optimistic about 2024, as they believe the recession has been averted and the Federal Reserve will lower interest rates. They maintain confidence in evaluating ESG issues, despite some products experiencing fund outflows this year.
Thomas Van Dyck, managing director at SRI Wealth Management, part of RBC, highlighted the importance of long-term investing in the quality of a management team. He says ESG factors help identify ineffective management teams and mitigate risk.
Investment Opportunity
Van Dyck recommends a diversified approach, suggesting the inclusion of 3- or 5-year impact bonds from Calvert Impact Capital for those seeking fixed-income exposure. For balanced exposure to equity styles, he suggests combining the Brown Advisory Sustainable Growth Fund (BIAWX) and the Parnassus Core Equity Fund (PRBLX) for both growth and value.
Among his favorite options is the iShares MSCI KLD 400 Social ETF (DSI), a broad ETF that tracks an ESG index. This ETF has been a solid performer, slightly outperforming the S&P 500 this year.
Since small- and mid-cap stocks have not appreciated as much as larger-cap stocks, Van Dyck suggests overexposing investments in this sector. He offers the Boston Trust Walden SMID Cap Fund (WASMX) and the Parnassus Mid Cap Fund (PARMX) as options.
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Growth choices
Shivani Vohra, portfolio manager at Parnassus, is biased toward growth stocks, especially if the Federal Reserve cuts interest rates. The ESG-screened Parnassus Growth Equity Fund (PFGEX) has performed similarly to the Nasdaq Composite this year, although the Magnificent 7 group was underweight.
Vohra compensates by focusing on software growth stocks like Adobe, Salesforce, and Intuit. For 2024, he remains optimistic and sees opportunities in the healthcare and consumer sectors.
The sectors to monitor
In the healthcare sector, Vohra suggests Thermo Fisher and Danaher, considering them solid players in the biotechnology sector.
In the consumer sector, he recommends holding LVMH in the portfolio, highlighting its attractive entry point and the protection offered by unique brands that are difficult to replicate.
As for the travel sector, Vohra lists Marriott and Airbnb as growth stocks. He believes the travel sector will continue to thrive, with Marriott being a player of scale and Airbnb retaining its dominance in long stays.
In conclusion, ESG investing looks promising for 2024, with multiple opportunities across different sectors.
| DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings. |
Original article published on Money.it Italy 2024-01-09 07:00:00. Original title: ESG, ecco dove investire nel 2024
