Non woke, non-ethical pensions

Bostonerimus1

Of course you might argue about the ethics of capitalism and decide that investment funds that provide people with gain without them doing any work are fundamentally unethical. But to answer your question I think the closest you'll come to funds that don't have ESG criteria are index tracker funds.

Universidad

[Deleted User] said:

Universidad said:

dunstonh said:

Don't you think it is more likely to be due to the credit crunch? 

Nope, it's definitely because of woke.

Not quite. It is coincident with the number of people saying "woke".  Rarely uttered before then, blabbered all the time after. 

It is certainly coincident, but also the other word with the same root.

Ironically, for all the people complaining about wokeness, I have literally only ever heard the word "woke" unironically used by those opposed to it.

dealyboy

I would like to comment regarding ESG, Governance, Woke + Authoritarianism but unfortunately this is political.

Tammer

Empirical evidence is that, over the long term, responsible funds give higher returns.

One to ponder when considering short term volatility possibly.

eskbanker

dunstonh said:

Historically, ESG, ethical, responsible or sustainable have all resulted in lower returns over the long term. 

Tammer said:

Empirical evidence is that, over the long term, responsible funds give higher returns.

Anyone care to substantiate these diametrically competing claims with credible and citable sources?

Bostonerimus1

eskbanker said:

dunstonh said:

Historically, ESG, ethical, responsible or sustainable have all resulted in lower returns over the long term. 

Tammer said:

Empirical evidence is that, over the long term, responsible funds give higher returns.

Anyone care to substantiate these diametrically competing claims with credible and citable sources?

Just shove it into a few index trackers and go and have a G&T or a Margarita. With regards to ESG vs anything else etc., angels and the heads of pins come to mind.

dunstonh

eskbanker said:

dunstonh said:

Historically, ESG, ethical, responsible or sustainable have all resulted in lower returns over the long term. 

Tammer said:

Empirical evidence is that, over the long term, responsible funds give higher returns.

Anyone care to substantiate these diametrically competing claims with credible and citable sources?

ESG is a difficult one as few ESG funds have a long history.    Sustainable/responsible is easier as they have been going longer.   However, you are still looking at mostly managed funds.

Typically, when you look at past performance, you see the odd year were SRI/ESG does better.  In the years following that, you usually see a range of marketing reports or opinion pieces saying that SRI/ESG is the new way.    And usually, it's followed by a period of underperformance, and it all goes quiet again.

Here are two global trackers with similar regional allocations.  It needs to be as close as possible for any comparison to be fair.  And the benchmarks as close as possible.

L&G MSCI World Socially Responsible Investment (SRI) Index

Benchmark:MSCI World SRI


and

Fidelity Index World

Benchmark: MSCI World Index (Net)


Very small differences in the regional make up and benchmarks are effectively the same except one is conventional and the other is SRI.

And here is the past performance:

Pat38493

You would have thought that if a large potion of the global markets is prioritizing investment in certain topics like green energy and decarbonization, those industries are likely to do well.  For example, if large investments are made across most countries in buying windmills, companies that make windmills are likely to do well regardless whether you personally agree with wind power or suchlike.  You would have thought that in future, companies that are involved in topics that are given regulatory priority by the world's voters and governments should do well.

Linton

Pat38493 said:

You would have thought that if a large potion of the global markets is prioritizing investment in certain topics like green energy and decarbonization, those industries are likely to do well.  For example, if large investments are made across most countries in buying windmills, companies that make windmills are likely to do well regardless whether you personally agree with wind power or suchlike.  You would have thought that in future, companies that are involved in topics that are given regulatory priority by the world's voters and governments should do well.

Yes, but windmills are a very niche investment sector, hardly appropriate for a significant holding in a diversified portfolio.  I think you will find that the poor performance of the SRI fund compared with the world tracker is caused by what it does not invest in rather than what it does.

I think people should look carefully at the SRI fund before investing - Microsoft is its largest holding at 17.2% followed by Tesla at 4.1%.  35% of its total assets are in the top 10 holdings.  These figures compare with a developed world tracker's largest holding being Apple at 5.2% followed by Microsoft at 4.6% with 21% of assets in top 10 holdings.  So the SRI fund's diversification could be questioned.

Perhaps someone could explain why Microsoft is SRI compliant whilst Apple, Amazon, Google and Meta (Facebook) aren't. 

LHW99

followed by Tesla at 4.1%

I have to say, I do wonder whether EV manufacture (not just Tesla) is actually any better for the environment than encouraging people to keep their existing cars longer.

For example, the damage caused by the extraction of battery materials is significant.