The Markets April 20, 2017

Institutional Investors Say ESG Helps With Returns and Volatility

However, there are some challenges that inhibit greater adoption of ESG investments, State Street Global Advisors finds.
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Most institutions (80%) have an environmental, social and governance (ESG) component as part of their investment strategies, according to a survey of 475 global institutional investors in the United States, Europe and Asia Pacific, including some of the largest pension plans, endowments and foundations, commissioned by State Street Global Advisors.                              

More than two-thirds (68%) of respondents say integration of ESG has significantly improved returns. In addition, 69% say pursuing an ESG strategy has helped with managing volatility.

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ESG implementation is driven by a no-compromise approach: three-quarters have the same performance expectations for ESG as they do for other investments.

The depth of ESG exposure within portfolios remains low: only 17% of respondents have more than 50% of assets with exposure to ESG factors, and 44% have less than 25%. One-third of this group has between 25% and 50%.

There are some challenges that inhibit greater adoption of ESG investments. Benchmarking is seen as one of the greatest challenges, the survey finds. More than half of respondents say they find it difficult to benchmark performance against peers and that accurate assessment of external ESG managers is an issue.

In addition, there’s internal confusion around what exactly ESG constitutes: three-quarters of respondents say there is a lack of clarity around ESG terminology in their organizations. Concerns around data, performance measures, internal capabilities and costs vary according to current levels of ESG investment exposure and maturity.

Integration is on the rise, but full integration of ESG criteria into long-term decision-making is low (just 27% are fully integrated), according to the survey. While most investors (78%) recognize the value of engagement with companies, some may be attempting to do too much with limited internal resources. Many respondents recognize the value of using firms with specialist expertise to help them deploy their ESG strategies. More than half use asset managers with a specialist division.

The full survey report is here.
Products April 20, 2017

Investment Products and Service Launches

Conway Acquires Alternative Investments Platform;, and ActiveAllocator Enhanced with TradeIt.
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Conway Acquires Alternative Investments Platform

Conway Investment Research has acquired operational control of the Guggenheim Alternatives Platform from GP Feeder Fund Management. Rebranded as the Conway Alternatives Platform, it provides institutional investors with access to alternative investments.

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“We are very excited to be taking over the operation of these funds from Guggenheim and to continue to offer advisers and their clients the ability to access alternative investments at a lower investment threshold,” says Tom Margulis, Conway co-Founder. “We look forward to expanding the offering in the future to include more quality hedge funds, real estate funds and private equity and credit funds.”

GP Feeder Fund Management is a subsidiary of Guggenheim Partners and was the operational manager of the platform through November 30, 2016.

NEXT: ActiveAllocator Enhanced with TradeIt

ActiveAllocator Enhanced with TradeIt

ActiveAllocator Holdings has integrated withTradeIt, a proprietary order management system which securely routes trade orders to brokers.

This partnership enables investors to optimize their existing portfolios on ActiveAllocator by linking their brokerage account and sending order messages to their broker directly from ActiveAllocator's platform. Users login to their broker via secure oAuth popup, specify the type of order and number of securities to trade generated by ActiveAllocator, and execute the trade to optimize their portfolios. TradeIt further provides real-time portfolio data from the user's brokerage firm, which is imported into ActiveAllocator.

Sameer Jain and Brian Jones, ActiveAllocator's co-founders, said in a joint statement, "Our integration with TradeIt for trade execution will now allow our customers to optimize their portfolios by buying or selling publicly listed equities and exchange-traded funds (ETFs) with their choice of broker. They can now trade securely, safely and quickly through most of the popular brokerages."

Nathan Richardson, co-founder and CEO of TradeIt adds, "TradeIt is fast becoming the platform of choice for seamless order execution through many of the large brokerages. Our partnership with ActiveAllocator helps financial advisers and retail investors to increase their investible universe, makes for automated implementation, permits scalability in managing assets, eases trading and periodic rebalancing and helps express house views while making strategic allocation decisions."

NEXT: Ascensus Upgrades D.C. College Savings Plan 

Ascensus Upgrades D.C. College Savings Plan

The District of Columbia has chosen Ascensus to serve as the investment manager of its D.C College Savings Plan. Ascensus recently launched a redesigned 529 account website for D.C. plan participants which allows them to more easily track their savings progress. The firm worked with the Office of Finance and Treasury, Lowe & Associates LLC, and Capital Cities LLC to craft a new investment lineup.

Ascensus College Savings provides all program management for the plan, including customer service and online functionality for account management. Ascensus is also responsible for marketing and distribution for the plan and will hire a local field representative to engage DC community groups and employers.

"We're pleased to partner with a 529 industry leader in our continued efforts to ensure the DC College Savings Plan helps our residents save for college," says Jeffrey Barnette, district deputy chief financial officer and treasurer. "Through our collaboration and partnership with Ascensus College Savings, we aim to help more District families cover rising education costs to give their children a brighter future."

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