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ESG investing positives emerge despite the Covid-19 year – What Investment

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“I think I’ve seen this film before/So I’m leavin’ out the side door” – so said Taylor Swift in her song Exile on her platinum album Folklore. The overriding lament is that people’s behaviour never changes. But when it comes to investing, we do not agree with Ms Swift – we are much more optimistic about this past year. It has changed investor behaviour and how markets operate. Here are four examples.

Reason 1: ESG has passed the Covid-19 stress test. In 2020, around 40% of ESG funds were top quartile (this is finance speak meaning they performed much better than their non- ESG peers) and that was rewarded with over $120bn inflows into ESG equity strategies (more finance speak, meaning they were popular and investors put their money in). Just to give you a comparison, there were $125bn of outflows from non-ESG equity strategies.

Reason 2: The ‘S’ in ESG climbed into the front seat with the ‘E’. There is no doubt that 2020 brought more widespread focus on our health and education, both at an individual and collective level. Coronavirus brought it home to everyone, as hospitals filled and schools and colleges shut their doors. When you combine this with the proliferation of social media and overlay everyone’s personal experiences, you create a situation where investors understand that companies that help us eat better food, work out regularly, provide sound educational tools and off er medical care to more people are going to be very important economic actors.

Reason 3: Environmental and social issues have become less political footballs, more “we need to do something now”. The pandemic helped to highlight some important environmental and social issues and had a knock-on eff ect of people wanting something done about these problems. It might be that the damage we had been wreaking on the planet became starkly clear; as cars remained on driveways and planes were grounded on runways, people enjoyed cleaner air and water and reconnected with nature. Also our unpreparedness for the pandemic resulted in governments spending monstrous sums on disposable PPE and other equipment to help us get ahead of the curve.

On the social side there was the fact that lower income groups are disproportionately affected by the virus. And that school closures widened the educational gap between children from different socio-economic backgrounds. The virus has brought into plain view disparities in our societies and problems with our environment. And people want these problems solved. This is a profound shift.

Reason 4. We made big strides in getting out of the acronym swamp. There is no doubt that acronyms and jargon that surround ESG have held us back and have prevented a lot of investors making a shift into this style of investing. It has given the industry the misconception of being a ‘trend’ or a ‘passing fad’. Many investors also wrongly believed that ESG was purely about excluding ‘sin’ stocks, but thank goodness, arguments about whether tobacco or guns are worse than animal testing have largely left the arena. Investors of all stripes now understand that ESG is about investing in companies that either make the world better, or don’t make it worse.

A formative crisis

People are now much more switched on to the drivers of sustainability and the economic impacts they have. It is not about debating the rights or wrongs of specific companies anymore. It is about consumer preferences (lots of people drive electric vehicles or follow a plant-based diet), employee values (people want to work for companies where they are properly looked after), corporate supply chains (companies want to work with other ethical providers) and investor sentiment.

What is interesting about all of these reasons to be cheerful is that they all emerged during a period when half the world shut down. But it is true that a crisis often bears innovation,
as scientists, engineers and technologists race to fi nd a way to get us out of the hole we are in. It is hard for any of us to imagine any silver linings when the media headlines are full of black clouds. But it is true that there is good news out there – the world is changing and is changing quickly.

Many ESG champions are involved in exciting new areas and off ering solutions to the problems we face. Thanks to breakthroughs in DNA sequencing and artificial intelligence, researchers sequenced the covid-19 virus in just two days, compared to five months for the SARS coronavirus in 2003.

It is hard to believe all this happened during a pandemic. But it did. Of course, 2020 has been far from easy. But it does not mean we can’t be excited about the innovation that happened during a global pandemic. There are certainly reasons to be cheerful as we look forward to investing in ESG over the coming years.

Patrick Thomas is head of ESG Investing at Canaccord Genuity Wealth Management.

Further reading: Five ESG themes for 2021 as those who doubted the cause take interest

Investment involves risk. The value of investments and the income from them can go down as well as up and you
may not get back the amount originally invested. This is not a recommendation to invest or disinvest in any of the
companies or funds mentioned. Names of companies and funds are included for illustrative purposes only.

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Here's why investors like Warren Buffett don't like gold as an investment – CNBC

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In this article

Gold is one of the largest financial assets in the world with an average daily trading volume of $183 billion, and its value has seen explosive growth in recent years.

At the start of 2000, gold was priced at just $460 per ounce when adjusted for inflation. By August 2021, that number had ballooned to roughly $1,815 per ounce.

But not all investors are in love with gold. Warren Buffett has spoken out numerous times on his doubts, calling it an asset with “no utility.”

“It doesn’t produce anything and that’s why from a long-term perspective, it’s a hard asset to invest in,” Odyssey Capital Advisors chief investment officer Jason Snipe said. “It’s prudent portfolio management to have maybe a small allocation there but this is not an asset that you want to be heavily entrenched into if you’re looking for long-term yield.”

Since 2011, the S&P 500 has returned more than 16% on an annualized basis. The annualized return for the 10-year Treasury note sat at just over 2% in that time period. Gold, meanwhile, has fallen slightly over the past 10 years.

“Early on, you see strong performance, strong return or yield from commodities such as gold. Generally, as we move into a different cycle, gold is not as great a performer as we move into a normalized environment,” Snipe said.

Whether gold is an effective hedge against market volatility is also widely debated among experts.

“Gold is not necessarily a perfect hedge against inflation but it can be a strategic hedge against inflation,” according to Suki Cooper, executive director of precious metals research at Standard Chartered Bank.

“Various studies have shown us that if gold is held for 12 to 18 months before inflation takes higher and then it’s held for an additional 12 to 18 months while inflation moves higher, it can be a good inflation hedge,” Cooper said. “But if it’s just bought for a short period, let’s say a month, it may not prove to be an effective inflation hedge.”

Watch the video to find out more about how gold performs as an investment.

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Ontario supports investment of $31.5M in Wellington, Perth county businesses – CTV News London

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London, Ont. –

Ontario supports $31.5 million surge within the Southwestern Ontario economy with $2.6 million being invested in Wellington County through the Regional Development Program.

The investment by Wellington County manufacturers, which will build on domestic manufacturing is being supported by the Ontario government, will help to create 71 jobs and retain 150 jobs.

“Through the Regional Development Program, our government is making targeted investments in local manufacturers to help them create good, local jobs,” said Vic Fedeli, Minister of Economic Development, Job Creation and Trade in a statement.

“These projects are making a significant impact in communities and economies across the Wellington County region and Southwestern Ontario by helping to secure the private-sector investment that will support strong regional growth.”

The investments are as follows:

  • Weberlane Manufacturing is investing $4.8 million to build a new 115,000 square foot manufacturing facility in Listowel.
  • Nieuwland Feed & Supply is investing $16.2 million to consolidate its production facilities as well as build a second feed mill on the property.
  • Bold Canine is investing $6.5 million to expand and renovate its facility, purchase equipment, and invest in research and development.
  • Wellington Perforated Sheet and Plate is investing $3.9 million to develop new products, and produce more steel parts in-house.

The Regional Development Program for Eastern and Southwestern Ontario was launched by the government in November of 2019.

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U.S. equity portfolio manager explains seven-step investment process – Wealth Professional

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The third step is identifying growth drivers. Sanders carries with him words from an old mentor – ‘always understand what drives top-line revenue’. For example, when Sanders first invested in Amazon back in 2003, when it was $17 a share, online penetration of retail sales in the U.S. was only 3%, but he believed that number was going to grow substantially over time. He met with Jeff Bezos who explained his competitive advantages – widest selection, lowest prices and convenience – completed his analysis and bought the stock. Sanders said: “That’s an example of a company that had a clear growth driver – penetration of its end market with offline retail going online.”

The fourth step is a financial statement analysis, getting into the nitty gritty of the balance sheets from a cash-flow perspective, while the fifth step is a management team assessment. Sanders is not interested in a company’s latest shiny product but instead wants to understand the key assumptions that go into his team’s investment process. ESG factors are also analysed at this stage, including how the board is made up and the compensation model.

Step six is critical and involves Sanders laying out four scenarios – best case, base case, bear, and worst, which are all five-year minimum discounted cash-flow models. The base case is what he thinks the stock is worth today, an estimate of cents on the dollar or intrinsic value. If Sanders believes a stock is worth $100 and it’s trading at $70, it’s 70 cents. He said: “We have this list of companies we’re following, and it’s ranked by cents on the dollar every morning. When stocks get to 70 cents, we recheck the analysis and we buy, and when stocks get up to 100 cents, we sell. That, in a nutshell, is our process.”

Every quarter these values are updated, in step seven, so it’s a moving target, underpinned by deep fundamental research that involves a 10-person team looking at one stock at a time before presenting it the team for debate.

While many investors focus on what is happening that quarter, Sanders told WP he thinks longer term, an approach illustrated by the crash of March 2020. He saw a health crisis, not an issue with the consumer, who ultimately drives the economy. Now in his third market cycle of managing money, the portfolio manager recognized that many elements were actually in good health, from millennials with no mortgages, a housing market at steady levels in the U.S. as it continued its recovery from the 2008 Global Financial Crisis, and a banking system that was doing well after 10 years of Federal Reserve stress tests.

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