Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Evergreen’s index update: Responsible managers lag in March quarter
Independent investment consulting firm, Evergreen Consultants, has released findings on the performance of green Australian and international equity funds that have high responsible investment ratings. The results showed that both underperformed their market benchmarks:
- Top quartile Australian equity managers in the Evergreen Responsible Investment Grading (ERIG) Index returned negative 4.48% in the quarter, compared with a 9.19% rise in the S&P/ASX 200 Index.
- Top quartile international equity managers in the ERIG Index returned negative 31.29% in the quarter, compared with a fall of 21.8% in the MSCI World Index.
Evergreen’s ERIG Index assigns responsible investment grades to fund managers, focusing on what a fund manager’s investment process does with respect to RI, rather than just looking at RI scores for portfolio companies. There are seven RI capabilities: ESG integration; negative screening; norms-based screening; active ownership; positive screening; sustainability-themed investments; and impact investing.
Evergreen Ratings Founder and CEO Angela Ashton says “Fund managers with a responsible investment or ESG tilt tend to favour tech stocks and avoid energy, materials and energy stocks.
It is only one quarter of performance and there were unusual circumstances, with the start of the Ukraine war, supply chain bottlenecks coming out of COVID and rising inflation. But it does highlight the fact that it is still a fairly small universe of stocks for RI managers. There are not a lot of opportunities, especially in Australia.”
The March quarter saw a rise in inflation and interest rates which triggered a rotation out of tech stocks and into energy and oil stocks.
Ashton said, “Long term, we believe Australian and international RI managers will deliver superior performance but what we saw in the March quarter is that in the short term there will be some growing pains for the sector.”
