Tag: systematic-investing

There’s been a paradigm shift in our recent conversations with advisors about ESG investing.

Whereas ESG investors previously were thought by some to be anti-capitalist tree huggers, this silly trope has run its course. Instead, there is a realization that optimal management of resources, social equity, and ethical corporate administration can significantly benefit human productivity and profits across the board.

This realization has helped portfolio managers recalibrate the idea of risk that is embedded within a portfolio. Just the same, the groundswell that is ESG has made it increasingly self-evident to investors that they no longer have to choose between their ideals and returns.

Haters who know I bleed “Carolina Blue” will accuse me of taking a cheap shot with the story I’m about to retell. But when the world of sports rivalries intersects with managing risk in an investment portfolio, it seems unreasonable to ask me to not make the following comparison!

“[B]ecause capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself.”

And just like that, Larry Fink, CEO of BlackRock, potentially changed everything. This quote is taken from his letter to CEOs in January, where Fink argues that climate change is the defining determinant of a company’s future success.

We believe his letter foreshadows a world where environmental, social, and governance factors are on a similar playing field as value, quality, and momentum.

My husband recently nearly talked me into purchasing his definition of “a decent” wristwatch — and it was a reminder of how we, as humans, are completely irrational.

Let’s say you want to drop a few pounds or improve your physical strength. You might hire a trainer to help create a plan and provide guidance.

Now imagine your trainer wasn’t just there for encouragement, but could actually do the exercise for you? That’d be a gamer changer!

That’s how an outsourced systematic investment manager helps financial advisors eliminate behavioral bias and stick to the process: by doing “the exercise” for them.