Cambridge Judge Business School, which is supported by Invesco, has produced a study, to contrast and evaluate two of the most popular responsible investing strategies employed at present: negative screening and active engagement.
As a backdrop, the authors consider the challenges faced by the University of Cambridge, which mirrors those experienced by institutional investors worldwide. Specifically, they make use of issues raised at a recent “Divest or Engage?” conference held at the university.
The authors discuss emerging academic evidence from recent (unpublished) papers to provide an up-to-date perspective. They describe the challenges in excluding undesirable assets from investment portfolios and present evidence on the effectiveness of engaging with investee companies. The strategies of divestment and engagement are often employed as complements to each other, and this can be advantageous.
The authors also caution that investors need to be aware of the disquieting evidence that Environmental, social and governance (ESG) metrics differ considerably across ratings services, and the choice of data provider can have a fundamental impact on the ESG credentials of institutional portfolios.
Risk & Reward - 4th issue 2023
Subtle differences in factor definitions can profoundly impact performance, and a crucial decision is whether to rely on a single or multiple factor signals. We present an approach that may help investors improve factor premiums by diversifying across signals and removing exposures to unrewarded risks.
Risk & Reward - 3rd issue 2023
Finance and investment are constantly evolving – and the latest advancements draw on the results achieved in the past. The new edition of Risk & Reward reflects this emergent continuum by reporting on our most recent progress in responsible investing.
Risk & Reward - 2nd issue 2023
Lower for longer is over – and the traditional negative correlation between stocks and bonds has vanished, at least for the time being. This issue of Risk & Reward features two articles that analyze what this means for portfolio insurance and asset allocation.
