The ‹Neue Zuercher Zeitung› has today published a critical assessment of certain trends and practices observed in the investment consulting world. In particular, the newspaper criticises the lack of transparency and potential conflicts of interests related to investment consultancies offering own asset management services and products or recommending those of «preferred partner» banks. It is worthwhile in this context highlighting the characteristics that make onValues a truly independent investment consultancy: a) the company is fully management owned, b) it does not offer own investment products, c) it does not accept any kind of retrocession or hidden fee (such as database fees) from asset management institutions, d) it excludes «preferred partner» relationships with any asset management institution.
View the NZZ article (German only): «Pensionskassenberatung im Interessenskonflikt»
The European Social Investment Forum has recently released a report that provides an overview of the growing role of investment consultants in supporting asset owners define and implement responsible investment (RI) strategies. The study shows that service development relating to RI is a recent phenomenon amongst investment consultants but growing quickly. It highlights the role played by boutique consultancy firms that are focused completely on RI advice, as opposed to larger consultancies that only recently have started to look into the area, RI advice being only a small part of their business. onValues, one of the oldest fully dedicated consulting firms in this space, is portrayed in a separate case-study in the report. A similar report has been released for North America by the US Social Investment Forum.
Download the report
«Eurosif 2009 Study»
In a recent article, ‹Investments & Pensions Europe› assesses current trends in the Swiss institutional investment market with regard to the integration of environmental, social and governance (ESG) criteria. The article is based on an interview with Ivo Knoepfel, managing director of onValues.
Download a copy of the article
«Fundamental shift in ESG»
Recent investments by APG, PGGM and TIAA-CREF, among others, have put microfinance investments on the radar screen of pension funds looking for innovative ways to further diversify their portfolio. But a lot of questions remain about the viability of these investments, their long-term risk and return profile, and the capability of the microfinance market to absorb growing pension fund investments. To understand how leading European pension funds already invested or considering investing in microfinance assess the current state and future prospects of microfinance, onValues interviewed pension funds from seven European countries on behalf of the World Microfinance Forum Geneva. The report summarising results from the survey was released today in Geneva.
Download the report
«Ends meet - Current state and future prospects of European pension funds’ investments in microfinance»
Increasing numbers of institutional investors are going on record to state that they believe that ESG issues will have a material impact on their financial performance. However, some believe that the way asset owners are structured, including their internal governance and how they measure and pay external asset managers, may be obstacles to truly long-term behaviour.
In June 2009 onValues facilitated a workshop for investment professionals and academics on this very topic on behalf of Mistra, The Foundation for Strategic Environmental Research. The workshop addressed the challenges of the asset owner-manager relationship in two stages:
1. Understanding how investors take decisions, how they are influenced by prevailing beliefs, and which behavioural biases are most dangerous for the long-term investor; 2. Presenting and refining better long-term models for the asset owner-manager relationship
Workshop participants expressed strong opinions on the changes needed to encourage long-term investment behaviour, including:
- Measuring asset managers' financial performance over rolling periods of at least three years
- Putting a greater emphasis on the manager selection process: asset owners should spend more time evaluating the quality of processes and people at the asset manager using transparent, systematic criteria
- Above all, the owner needs to give his managers the feeling that they are trusted: the ‹climate of fear› often found in institutional asset managers is highly damaging to long-term investment
The detailed conclusions of the workshop can be found in the report below.
Download the workshop report
«Winning the long-term game – new insights into asset owners' behaviour and their interactions with asset managers»
In collaboration with the German NGO Germanwatch, onValues this week published a report that assesses the observed and expected impacts of the current financial crisis on the financial industry’s efforts to integrate ESG and climate change-related issues in investment decisions. The report was distributed at this week’s Bonn climate change talks. Over the short term the authors expect set-backs in the industry’s efforts in this area. These set-backs will be particularly pronounced if the crisis persists for a longer time period, i.e. if financial markets do not stabilise by the end of 2009. The Copenhagen Climate Conference in December 2009, in combination with an ongoing financial crisis, could become the ‹make or break› tipping point for the market’s continued efforts to integrate ESG and climate issues, at least for the short- to mid-term. The mid- to long-term prospects for integration, on the other hand, are seen as positive given a series of strong underlying trends, among others the change in attitude of the US market and the increasing manifestation of the financial implications of environmental and climate change impacts.
Download the report
«Observed and expected impacts of the current financia crisis […]»
Mistra, The Foundation for Strategic Environmental Research, has published a summary of its 2008 review of external asset managers. The review, which was carried out by onValues on behalf of Mistra, investigated the steps forward taken by Mistra's asset managers in their integration of ESG issues into investment decision-making and active ownership. Following the review detailed feedback was presented to Mistra's investment committee, and constructive criticism shared with the asset managers. The public summary (downloadable below) summarises the key findings as a measure of transparency and accountability to Mistra's stakeholders.
The 2008 review, the fourth of its kind, observed that in most cases the ESG component had a positive or no effect on financial return, with risk levels that were in line with the reference portfolio chosen by the manager. The strong showing of Mistra's managers on active ownership was also notable, with 66% of the managers receiving the top rating for engagement with companies on ESG and broader strategic issues.
Mistra's endowment, which is currently valued at SEK 2.8 billion (US$ 350 million), is invested through eleven mandates and funds managed by eight different asset managers. All the investment management agreements explicitly require the manager to take account of environmental, social and governance issues.
Download the «Public summary report»
onValues today released results of the latest survey of the Swiss sustainable investment market. The report shows that, due to the financial crisis, the strong growth trend experienced by the sustainable investment market in the past years has been stopped and for the first time since inception of the survey the market has contracted considerably. The size of the sustainable market per end of 2008 was 20.9 billion CHF (funds, mandates, structured products), which corresponds to a decrease of 38.7% compared to the same value per end of December 2007. If we take sustainable funds only, the assets decreased by 35.3%. In comparison, the Swiss fund provider assets under management for comparable fund categories decreased by 40.2% in the period Dec. 2007 to Dec. 2008.
The asset inflow in existing and new sustainable funds in 2008 (especially in lower-risk broadly diversified equity, strategy and fixed-income funds) more than compensated the outflow (especially pronounced for some higher-risk theme funds).This resulted in a net asset inflow in sustainable funds of approximately 8.5%, compared to a net outflow of 6.4% experienced by the average Swiss fund provider in 2008. In relative terms, the net inflow experienced by microfinance and fixed-income/strategy funds was particularly marked.
«Sustainable investments in Switzerland 2008»
Today the final report of the Who Cares Wins Initiative, entitled ‹Future proof? Embedding environmental, social and governance issues in investment markets›, was launched at the World Economic Forum Annual Meeting in Davos, Switzerland.
The report contains a detailed assessment of the industry's progress in the field and a series of strategic recommendations to advance the integration of ESG issues into mainstream investment decision-making and ownership practices. The report was authored by onValues and sponsored by IFC, the UN Global Compact and the Swiss Government. It builds on more than four years of engaged discussions among industry practitioners that took place under
the Who Cares Wins umbrella.
«Future Proof? Embedding environmental, social and governance issues in investment markets»