Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

FREE EBOOK

How to Day Trade Stocks & Indices

  • Place your first trade
  • Identify 9 chart patterns
  • Pro strategies step-by-step

You'll also receive our newsletter and other Opto emails in accordance with our privacy policy. This form is protected by reCaptcha

  • Columnists

Why 2020 is a seminal moment for ESG

Why 2020 is a seminal moment for ESG

While most assets took a beating during the initial phase of COVID-19, environmental, social and governance (ESG) investments did better than most.

The ESG investment theme isn't new. Even before the virus crisis hit, sustainable investing was becoming a hot topic with investors. It is something that's been in the RBC ethos for a long time.

But recent experience shows that ESG stocks with stronger ESG characteristics are more resilient during bear markets, with most outperforming the market in February and March, Morningstar analysis shows. Between mid-February and mid-March, 66% of ESG funds ranked in the top half of their categories.

“The ESG investment theme isn't new. Even before the virus crisis hit, sustainable investing was becoming a hot topic with investors. It is something that's been in the RBC ethos for a long time”

 

The influential younger generation

The younger generation’s focus on sustainability is a common topic in client conversations. One client, for instance, was interested in ensuring their entire portfolio had an ESG stance at the insistence of their younger daughter.

According to research from The Economist Intelligence Unit, commissioned by RBC, 76% of the UK’s younger demographics say it's increasingly important to consider ESG factors when investing, compared to 37% of older generations.

   

Sustainability is cheaper for long-term investing goals

Until the pandemic hit, stocks with good ESG credentials were expensive. However, the recent market pullback has made ESG stocks better value for long-term investors, such as those around health, clean energy, water, waste and food. Indeed, across the ten-year investment horizon, these stocks are relatively cheap now so this could be a perfect moment to add some quality ESG companies to a portfolio.

“Until the pandemic hit, stocks with good ESG credentials were expensive. However, the recent market pullback has made ESG stocks better value for long-term investors, such as those around health, clean energy, water, waste and food”

 

Embracing investments in these forthcoming trends is a way of readying a portfolio for the coming changes in the global economy. Obvious long-term themes include the move away from fossil fuels to renewable energy, but there's also the increased use of artificial intelligence and new technology to help care for both an ageing population and the environment. Investors can benefit from these trends, and use them to future-proof a portfolio.

 

Bio

David Storm is the head of multi-asset portfolio strategy at RBC Wealth Management. Based in London, he joined the firm in 2008 and has held positions as director of investment solutions and head of portfolio consulting.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles