
Why should an investor consider ESG funds in their portfolio?
Deirdre Cooper, co-manager of the Ninety One Global Environment fund, gives a quick overview on why investors should consider adding ESG funds to their portfolio for diversification.
Deirdre Cooper: I think you should have an allocation to those companies that are the solution providers for the world’s biggest problems. You know, those companies are going to see structural growth ahead of cyclical; that will bring different performance drivers. It’ll probably work particularly well in a really low growth world, might work less well in a world that’s really worried about inflation and interest rates.
And then there is the impact element. I think if you want to allocate capital to companies that are doing a great job, that are developing products and services, that are helping to solve the world’s problems, and have people running the money that are talking to those management teams all day, every day, asking them to spend more and more resources, whether that’s capital or people or R&D on those areas that have the potential to solve the world’s sustainability problems, then to some extent, you are putting your money to work in a way that can have a positive impact.
So, I think there’s two reasons to do it, and both are important.