Join Samuel Rhee, Chief Investment Officer of Endowus, and Yulin Liu, Investment Lead of Endowus, as they dive into ESG investing in more detail and share a better approach to incorporating ESG themes into your portfolio.
8:22 Introduction to ESG Portfolios
13:20 What is ESG Investing
19:39 How ESG is a great investment opportunity
23:15 ESG investing is important to Singaporean investors and their pain points
29:14 Endowus ESG Portfolio Investment Strategy
37:33 How Endowus grants access and evaluate to best ESG funds in ESG investing
41:38 Endowus’ ESG Portfolio is globally diversified
49:50 Holistic processes of ESG Integration
56:00 Difference between Endowed Core vs Endowus ESG Portfolios
1:01:40 Get Started with your ESG investing journey at Endowus
Excerpts from the Webinar
What is ESG Investing and why is it important? (13:20)
ESG investing is a strategy and practice to incorporate environmental, social and governance factors in investment decisions and active ownership. Traditionally, when we make an investment decision the consideration is mostly financial. For example, one would analyse the financial statements of the company and how it is strategically positioned against its competitors to have a view on the company’s growth potential and its evaluation, whether it is undervalued or overvalued before you make a conviction on an investment decision.
All ESG is calling for is that investors should look at how companies are treating the environment and take hold of different parts of the society like the suppliers and the employees.
This is important both from an ethical standpoint (as an ethically conscious investor you would not want to invest in an irresponsible company or stocks) and a financial standpoint because ESG investing can provide you an information edge compared to other investors to the market.
How ESG is a great investment opportunity (19:39)
From an investment perspective, it represents great investment opportunities. The scale of change needed and the amount of capital required to align the sustainable objective is huge. It is exciting to see all the global organisations, regulators and investors really pushing this sustainable movement forward, which will ultimately create efficiency and long term value for all of us.
Under the 2015 Paris Agreement, nearly 200 countries agreed to limit global warming to no more than 2°C for the long term. To achieve this target, it is estimated that the amount of investment required is about 2 trillion per year, which translates to 15% of the global equity market. The amount comes from different agencies, such as different governments, international organisations (eg. IFC) and corporates. The implication of this scale for the public market of investors is that there will be more investment opportunities and rewards.
For example, the Green Bond Market has taken off the past few years, it has grown from a mere size of 76 billion to 161 billion from 2013 to 2020. ESG investing is on the rise and it is expected to grow. As of 2020, it is estimated that 40.5 trillion assets invested globally now incorporate some kind of ESG data and there was 80.5 billion inflow to ESG funds in the third quarter of 2020 alone.
How Endowus grants access and evaluate to best ESG funds in ESG investing (37:33)
We are offering exclusive access and costs. We have looked into the way these funds have invested, we have had our calls and done long due diligence research with the managers of these funds, we have spent time pouring over their reports, we have developed our own rationale on funds and selection process.
These are the funds we believe are the ones executing at a very high level. We have worked with these managers to bring in funds. For example, two funds are not available on any other platforms. The JP Morgan Global Bond Opportunities Sustainable Fund and the PIMCO GIS Climate Bond Fund are the two funds that have just been launched or only available at private banks or institutional investors and have not been made available to retail investors. They are exclusively available to Endowus.
We launched and seeded the PIMCO Climate Bond Fund (the first climate bond fund that PIMCO is launching in Singapore), it is an institutional share class so it's the lowest fee -- much like ⅓ the cost of a retail PIMCO bond fund. The first climate bond fund with green bond exposure is brought to Singapore with Endowus by Endowus together working with PIMCO (the largest fixed income manager in the world and a leader in the sustainability space).
QnA: How does passive ETFs and active fund management work in the ESG investing space? (1:09:51)
In the ESG investing space, passive investing is not truly passive because there is always going to be somebody who is going to create a benchmark based on some measure -- negative and positive screening, and certain values - so active decision from someone has to be made. The only thing you can do passive is expose yourself to a market. The moment you start implementing an Environmental or a Social or a Governance factor into investing it becomes an active component.
QnA: What is the difference between Endowus Core Portfolio and Endowus ESG Portfolios?(1:10:33)
A major difference between Endowus Core and Endowus ESG Portfolio is that Core is mainly passive (broad market exposure globally) while ESG is going to be a much more narrow exposure to certain parts of the market which have high quality ESG components and factors.
Get a head start on financial literacy & general investing by watching our Investing 101 with Endowus 4-part series here.