In a world increasingly averse to risk and intolerant of inequality, we explore the growing importance and effectiveness of sustainable factor investing.
With a growing appetite for evidence-based investing and the desire for a better world, we are seeing a rise in demand for both factor investing and environmental, social and governance (ESG) considerations. Now these two areas are increasingly converging, and the result is what we call sustainable factor investing – a phenomenon whose implications for the sphere of investment and beyond are potentially far-reaching.
In this whitepaper we investigate into the histories of factors and ESG respectively; we explore how their stories have more recently become entwined; and we demonstrate the benefits of an investment philosophy that takes proper and rigorous account of both. In doing so, we draw on a range of empirical research and analyse the contributions of some of the most influential figures in the annals of finance. We also look to the academic arena for an external perspective.
Finally, we explain how sustainable factor investing has become central to our own ideas about long-term asset management, underpinning an investment ethos that thrives on dialogue and transparency and prizes ownership over speculation.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.