The COVID-19 pandemic has had irreversible consequences for how people live. When it comes to investing, for example, incorporating Environmental, Social & Governance (ESG) factors in the decision has become the new normal. Despite the pandemic’s disruptions to portfolio formation this year, a massive increase in socially responsible investing has taken place across the board. ESG ranked high globally among trending search engine keywords, making ESG-focused equity and bond assets a favorite for investors. As 2020 draws to a close, ESG-related investments are booming amid reports of outstanding capital growth.
Financial markets worldwide have recently enjoyed record new highs, and investors have shown signs of optimism. Yet, it is increasingly difficult to ensure effective trading and risk management, which is vital in times of abundant liquidity and investment possibilities. This is where ESG factors can play a crucial role.
The coronavirus outbreak, intensified climate change, and a spate of protest demonstrations and strikes all cast their shadow on 2020. However, around the world, ESG investing continues to grow vigorously. With this development in full swing, the international investment community is taking specific steps to reject or transform companies that ignore ESG issues. The objective: make the Earth a better, more sustainable place.
Accounting for ESG factors in the portfolio screening process helps fund managers take preemptive steps to address corporate risks. In our post-COVID-19 world, few things are more important than carefully selecting stocks, bonds, and other investment options with ESG criteria in mind. When integrated into investment decisions, ESG factors can alert fund managers to problematic firms, mitigating risks.
“In 2020, environmentally conscious investors have turned to ESG products in a big way,” says Steven Huang, Chief Investment Officer at PineBridge Investments Taiwan. “Looking forward, we expect multi-asset funds that cover ESG-focused equities and bonds to gain traction in the market. Those who prefer more growth potential but less stock volatility in their portfolios can take full advantage of this fast-evolving ESG movement, for instance adopting a quantitative ESG multi-asset strategy that invests in equities and bonds.”
Still considered a new financial concept in Taiwan, ESG products are increasingly in demand. To better serve investors here with a one-stop-shop approach, PineBridge has once again fostered innovation. It launched the ESG quantitative multi-asset fund, Taiwan’s first ESG-themed multi-asset fund. Through global market allocation, investors can now acquire ESG bonds as well as stocks in one fund transaction. This potential game-changer may bring about comprehensive upgrades to ESG standards for many multi-asset products in the Taiwan market.
PineBridge previously launched PineBridge ESG quantitative bond fund (The fund invests substantially in high-risk, non-investment-grade bonds, and its sources of dividend payments may include the principal) in January 2020. While the company has been taking the lead in environmentally conscious investing, others in the industry soon moved in concert with ESG product roll-outs.
As of October 31, 2020, the fund has NT$22.4 billion under management, according to data compiled by the Securities Investment Trust & Consulting Association of the R.O.C. (SITCA). Categorized by SITCA as an International Investment-grade Bond Fund, it is the largest global investment-grade bond fund in Taiwan. PineBridge launched Taiwan’s first ESG quantitative multi-asset fund within less than a year, continuing to spearhead the market’s ESG fund development.