January's most read: Investors seek better disclosure for thematic investing; The CIO who overhauled a $15 billion pension portfolio
ESG outlook 2022: investors seek better disclosure for thematic investing
Companies and regulators can help investors identify investment opportunities better by producing higher-quality data and enforcing tougher disclosure standards, market observers said, as sustainable investment inflows rise and thematic investing targeted at areas such as climate change is set to push growth further.
Environmental, social and governance (ESG) funds now account for 10% of fund assets worldwide.
A record $649 billion poured into ESG-focused funds worldwide from the beginning of 2021 until November 30. This was a large increase from the $542 billion in the same period in 2020 and $285 billion in the same 11 months of 2019, according to latest Refinitiv Lipper data.
However, due to a lack of standards, investors have been left largely to their own devices to sieve out assets that may simply be slapping on an ESG label.
There’s always an alternative: The CIO who overhauled a $15 billion pension portfolio
Under Jang Dong Hun’s management, the $15 billion Public Officials Benefit Association (Poba) generated a record-high funding ratio, historical returns, and a resilient portfolio that remains unflinching through a financial crisis, a pandemic and now a new inflationary environment.
Last year, Poba was one of the biggest winners at AsianInvestor’s 2021 Institutional Excellence Awards, winning Best Asset Owner in Korea and Japan; Best in Class - Response to Covid-19 Pandemic; and Best in Class - Standout CIO.
His flexible approach comes from a distinct personality trait that helped Poba survive and even thrive amid constantly changing market conditions, he mused.
In the first half of 2020, for instance, Poba faced difficulties deploying capital due to the low number of transactions in the private market amid the pandemic.
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Allianz targets Chinese real assets despite Evergrande
Evergrande’s near bankruptcy has done nothing to dent Allianz’ appetite for property and other real assets in China, according to two of its senior executives.
“Evergrande has not changed our long term view. We think this is an organised plan, [Beijing] had the three red lines policy and they are implementing it,” Rushabh Desai, CEO of Allianz Real Estate’s Asia Pacific business told AsianInvestor. The government’s three red lines policy limits the amount of annual new borrowing for property developers by capping their debt ratios.
Allianz Real Estate has €2.2 billion of its €79.2 billion worldwide AUM invested in China. Desai said that in the government-guided deleveraging it had been hard to pinpoint which company would be first in line.
Despite the headlines, there were no surprises in how the process was being handled for the Allianz Real Estate China team, which comprises five staff based in Shanghai. “If you’re on the ground you spend time and resources understanding every situation, and this one seems like a well-controlled restructuring,” he said.
ESG drives thematic ETF interest after record inflows in 2021
Investors increased their appetite for exchange-traded funds (ETF) in 2021, with worldwide inflows hitting $1 trillion for the first time. Those with environmental, social and governance (ESG) themes garnered the most interest.
At $900 billion, inflows for US-listed ETFs surpassed 2020's global total of $735.7 billion on their own, according to Morningstar data.
Over the past two years, inflows into thematic ETFs have surged and now total over $40 billion in assets under management (AUM) across 81 ETFs. These inflows mark a 400% increase from under $10 billion at the end of 2019, according to data from Global X.
Market Views: How can RCEP benefit investments in Asia?
In renewed efforts to establish regional trade relationships, the world’s largest free trade pact, the Regional Comprehensive Economic Partnership (RCEP), took effect on the first day of 2022 among 15 Asian countries.
Member states include China, Japan, South Korea, Australia, New Zealand, and the 10 members of the Association of Southeast Asian Nations (Asean).
Since the trade deal can facilitate China shifting its supply chain to Asean countries for lower cost bases, the latter is believed to be a big beneficiary. RCEP also provides a favorable environment for the e-commerce and industrial production sectors, among others.
AsianInvestor asked fund managers how RCEP might benefit investments in Asia.