This month’s cover story is focused on fund manager turnover in the industry. What has sparked the recent spate of fund manager departures, how can a firm best execute and communicate a change in personnel and – most importantly for DFMs and fund selectors – what will the future cohort of managers look like?
Portfolio Adviser spoke to 11 key figures in the industry about who could, and should, be heading up funds over the coming decades. Alongside wide-ranging requirements discussed on p22, a key point that was flagged was that fund managers must have their finger on the pulse when it comes to ESG. Robert Fullerton, senior research analyst at Hawksmoor, says ESG and sustainability is “likely to become even more prevalent”, while Parmenion’s investment director Meera Hearnden argues that the older generation of fund manager is “less likely to have investment processes that fully embed ESG characteristics … this can often come across as a weakness”.
Yet multiple research sources show the demand for ‘ESG’-labelled products is dwindling. In fact, data from Calastone published on 7 November – the day this magazine went to press – found that ESG equities saw their sixth consecutive month of net selling. Many investors surmise that part of the issue is the acronym itself. In a recent article for the Financial Times, professor of corporate finance Aswath Damodaran picked apart each of the three letters, stating that pressure from the ‘E’ (environmental) has led to fossil fuel companies spending less on research to help divest from fossil fuels; the ‘S’ (social) has politicised ESG investing; and the ‘G’ makes corporate governance seem like a ‘nice to have’ as opposed to a basic requirement.
On p32, Janus Henderson CEO Ali Dibadj says the concept of ESG is on a trajectory to become “table stakes”. “The most common parlance of it is ‘ESG integration’ but, really, it is all just part of what investors should do,” he told editorial director Julian Marr.
The need to reduce our carbon footprint, to become less dependent on fossil fuels, for greater biodiversity and to improve corporate governance is clear. Perhaps ESG is lacking popularity, not because the industry is caring less but because it has now become a stepping stone towards a broader industry evolution.
