![]() ![]() “But there is no trade off,” he asserted. There is this belief that there is a trade-off between your own goals and the planet’s goals.” “Your main objective is your own returns. “Investment is intrinsically a selfish activity,” Iaccarino said. “We are not subject to this boom and bust that is quite typical of the more thematic funds.”Īs the strategy approaches its one-year launch anniversary, it is up 7.6% over the past 11 months, roughly in line with 7% from the MSCI World Climate Paris aligned benchmark but well ahead of the 34% decline in the Nasdaq Clean Edge Green Energy index. “We had the privilege of not investing in renewables thanks to a wide spectrum of opportunities that we chase,” he said. He revealed that despite running sustainability focused funds, his bottom-up approach led his team to avoid investing in any renewables stocks because they were worried about the factors mentioned above. Iaccarino is the portfolio manager of multiple Amundi recently launched ESG funds including Global Equity Sustainable Income, Global Equity ESG Improvers, and Net Zero Ambition Global Equity. “If you only invest in the best-in-class companies from a sustainability perspective, you run the risk of having a clear growth bias, and when growth is out of fashion and value comes into play you will underperform because you have this style tilt,” Iaccarino explained. This means fund managers run the risk of overpaying for their investments and giving up future returns in favour of being committed solely to investing in firms with the best ESG practices. Similarly, if such an investor only picks companies that have great ESG credentials, they are often paying a premium for the stock relative to their competitors, colloquially dubbed the ‘ESG premium’. He said: “Renewable projects tend to be more long-duration and with long-duration project builds in an inflationary environment, you have an overrun in terms of costs, you have an increase in financing costs and the economics don’t work anymore.” However, Iaccarino argued that there is no need to compromise on returns if investors avoid falling into the trap of tunnel vision – focusing solely on one particular theme like renewables or clean energy. ![]() The Nasdaq Clean Edge Green Energy Index is down over 50% from its peak in 2021 after a boom in sustainable fund inflows and a bust on the back of markets adjusting to stickier than expected inflation and central banks raising interest rates to levels not seen two decades. After a prolonged bear market in clean energy and renewables stocks, many investors have been wondering if their desire to put money behind decarbonisation has come at the cost of returns. ![]()
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