Despite more than a year of Covid 19 restrictions, as the volatility in markets reduced, Save & Invest has been able to reorientate portfolios to be relevant to a changed world.
As we entered this new decade, we had anticipated it would be very different than the one that preceded it.
Certainly, we believed it would be led by environmental issues and the huge opportunities this could bring for new world economics. We sensed that public opinion and even politics was catching up with the scientists and activists and that this would herald fundamental change.
We increased our research into the funds that could be the potential winners in this new era and those that could be the casualties. The corona virus has accelerated the changes that were already started.
"We are going to see capital allocation try to make sure that opportunity improves for all and the capitalism broadly is more inclusive. And so, I think this crisis accelerates that. I think that a crisis has a tendency to accelerate trends." David Soloman CEO Goldman Sachs (Businesswire interview)
Environmental and social factors are growing strongly as drivers of investment returns and new ways of thinking about the allocation of capital, across the globe and individual portfolios is taking hold.
In 2020 we saw petroleum giant BP, with over one hundred years of history, write off £14 billion of its assets as the move away from fossil fuels takes hold. Electric car manufacturer Tesla, only established in 2003, became the most valuable car maker in the world.
The changes taking place are not simply old word versus new world, the shares of agricultural business John Deere, established for nearly 200 years, hit an all-time high in September 2020, because it is capitalising on and facilitating new trends in agricultural production, that use less resources for greater output. John Deere is a company which was transformed itself in 1837 with its innovative self-scouring plough, using Scottish steel. It is still innovating today to literally spot the wheat from the weeds, through sensors on its tractors.
Thinking about investment has changed, it is not just about returns, it is about impact, the capital markets, driven by tens of millions of individual savers and investors, can make on the lives of others across the globe.
Baillie Gifford fund Manager, Tom Slater, described how, using the technology created by one of the companies in which they invest, Ilumina, the Chinese had mapped the genome of Covid 19 within 2 days, and because of this within 4 days another of their companies, Moderna had their vaccine ready for the robust testing phase. The Moderna vaccine is creating a new revenue stream for the company which is enabling new research and more potentially health revolutionising vaccines.
Long established positive impact Investment Management Group Liontrust, describe sustainable or positive impact investing this way.
“Our investment process and philosophy is based on the belief that in a fast-changing world, the companies that will survive and thrive are those which improve people’s quality of life, drive improvements in the efficiency with which we use increasingly scarce resources and help build a more stable resilient and prosperous economy. We believe that most investors underappreciate the speed and the scale and persistence of these broad trends and therefore often underestimate the longer-term growth and earnings potential of sustainable companies." Liontrust May 2020
Sustainable investing in Save & Invest’s view makes sense for investors and for our world and can create balanced portfolios using a range of funds from experienced investment houses with a track record of innovation and solid returns.
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Why sustainable innovation is the future of investment
Featuring Jeffrey Deans and Lynsey Fraser from Save & Invest.