Supplements » Global Industry 2020

New York roundtable: Saying no to the ESG naysayers

Funds Europe – Isn’t the fixed income ETF universe still very undeveloped, though? We’d say that in the UK and Europe, but I don’t know about the US.

Van Eck – Fixed income fell apart in March and April. I think some investors have turned away from fixed income ETFs because of that experience, but fewer than I’d have thought. I’d say fewer than 20% of investors have said, ‘I’m never coming back to fixed income ETFs,’ despite that dislocation in March and April, which is surprising to me.

Funds Europe– Are you all under pressure to develop a private markets business, such as private equity and private debts? That seems to be the momentum of the last few years.

Ehret – We have a private funds business and a structured capital business. Our private credit business launched three years ago and is now over $2 billion. We also recently announced an agreement to acquire a real estate private equity business in the UK, so that is definitely an area that I’m focused on.

Jones – At Amundi, our private markets business has been predominantly focused in and around Europe, but we do consider the opportunity to diversify into other regions.

Garland – I’d echo that. We have a very well-developed private debt business in Africa and we are in the process of developing that and broadening it beyond Africa. We do a lot of lending in Africa through that, so that is a huge focus for us.

Van Eck – Are investors over-allocated to growth? I’d be interested to hear.

Garland – I was at Janus during the tech bubble of 2000-2001. This is reminiscent of that time there. I look at all these managers saying, ‘You don’t know how high these companies can go.’ This is the growth bubble and it’s going to burst.

Jones – You can see the bifurcation between those growth managers who are going to over-concentrate into a select few of the hyper-growth stocks, those that are really driving the returns and those who are more broadly diversified. The concentration of returns coming from just a few stocks is crazy-ridiculous!

My concern is whether clients understand the distinction across the peer group between conservative growth and concentrated high-growth strategies.

Van Eck – The hot thing in the ETF world in 2020 has been thematic investing, which is neither growth nor hypergrowth. Then also ESG solutions have a growth tilt. You don’t know how much growth you have until the trend reverses. I don’t talk to investors who are unconscious of this, which is why I asked the question, but I think you don’t know how everything compounds until after the fact.