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Sustainability: a hot topic on day one of FundForum International

ESGEurope’s largest fund conference, FundForum International, takes place this week in Copenhagen. The agenda features panel discussions on some of the industry’s hot topics, such as ESG, digital and asset allocation.

Funds Europe caught up with some of the presenters and attendees, starting with Bill Gourlay of Aon, Aled Jones of the London Stock Exchange, Hortense Bioy of Morningstar, and Ian Crispo of Deutsche Bank Wealth Management.

Bill_GourlayBill Gourlay, global head of investment product development, Aon

What does the future hold for environmental, social and governance (ESG) investing?
We would expect to see a significant focus on ESG data, given that there are currently challenges around its definition, availability and timeliness. Research and ratings providers have an important role to play here, not least in how they respond to the pressure created as investors consider turning towards raw data. Aligned to this is a need for clearer standards and best practice, not least to remove the potential of greenwashing – which in turn does raise the likelihood of associated regulation. Fiduciary duty will also be impacted as ESG factors need to be incorporated into risk assessments and decision-making. 

Aled JonesAled Jones, head of sustainable investing Europe, London Stock Exchange Group 

What opportunities are there for index providers in ESG investing?
The opportunities in sustainable investment are huge.  Global assets under management has reached approximately $30 trillion and interest is growing across the investor spectrum, from the institutional market, to wealth management and retail investors.  We are seeing this in conversations with clients who are looking to incorporate ESG themes and issues into the design of equity, fixed income and real-estate indices.

On broader allocations by investors to green assets, more needs to be done to de-risk the process, not just by helping to provide first loss capital on green projects but working on the misconceptions of what green investing means.

Hortense BioyHortense Bioy, director of passive strategies and sustainability research, Morningstar

Which do you think are the most important themes at this year’s FundForum?
ESG is of course one of the most important themes of this year’s conference. There are two ongoing trends.

First, ESG integration is becoming the new normal. An increasing number of portfolio managers are integrating ESG factors into their investment process to mitigate risk and/or add alpha. They’re also becoming more active owners by engaging with portfolio companies.

The second trend is product proliferation. Asset managers are launching new ESG-focused funds to respond to the growing demand from socially conscious investors. Assets in ESG products are growing.

Nevertheless, there is a lot of confusion around the various ESG approaches, and accusations of greenwashing are rife. That’s because ESG investing is still a relatively new space. Hopefully with regulation and investor education, these issues will disappear. What matters is that the industry is moving in the right direction, focusing on environmental and social issues that were not getting much attention before. The more assets invested in this space, the better, even if these assets reflect differing degrees of commitment.

Ian_CrispoIan Crispo, head of fund selection, Deutsche Bank Wealth Management

What are the main challenges for fund selectors this year?
Given the low rates, the elevated credit and equity markets and the late cycle environment we are in, our main challenge has been finding strategies and solutions that provide continued decent levels of attractive returns along with downside protection and diversification. We’ve recently been focusing on alternatives, structured credit, unconstrained fixed income, and lending-focused strategies such as direct lending, collateralised loan obligations, business development companies and derivative-based fixed-maturity products. Real asset strategies such as real estate and infrastructure have also been of interest in our less liquid allocations.

How can fund selectors optimise ‘client experience’?
Part of our role is ensuring that the funds we approve can be seamlessly integrated into client portfolios. We provide a clear and concise description in bullet-point format of each fund’s unique value proposition, its key benefits and how it fits in a portfolio context. In our experience, when this is accompanied with our chief investment office views, it goes a long way to improve our clients’ experience.

Of course, we also offer the necessary marketing documents to go with it, and train our sales force when required, for example, for more complex products.

Bill Gourlay, Aled Jones, Hortense Bioy, and Ian Crispo are speaking on day one of the conference, held from June 25-27 at the Bella Centre, Copenhagen, with special workshops on June 24.

Click here to learn what other key industry figures had to say ahead of the event.

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