In the good old days, the name of a mutual fund gave investors a clear hint about the investment objective and/or strategy of the fund. Unfortunately, these days are over, and fund names have become another tool in the toolbox for product marketing. This means that product managers are seeking fund names which are catching the interest and, with this also, the money of investors. To achieve this, fund names often include buzzwords which are related to a market and/or investment trend. Therefore, it is no surprise that regulators around the world have begun to increase the pressure on the

Shortly before the Regulatory Technical Standards (RTS) under the Sustainable Finance Disclosure Regulation (SFDR) comes into force on January 1, 2023, the European ETF industry got hit by a wave of reclassifications with regard to categorization of ETFs by the respective SFDR articles. More broadly, it is not surprising that a number of promoters need to reclassify their funds and ETFs with regard to the SFDR since promoters were missing definitions and clarity on measurements that would assign a fund or ETF to one of the three respective SFDR articles. With the demand to classify their funds prior to the

The demand for better information about sustainability-related matters which would enable investors to factor in sustainability-related risks and opportunities in their assessment of enterprise value is increasing globally. At the same time, there is no standard for the disclosure of non-financial information, which means that a number of metrics and measures used by companies are not comparable. The same is true for data vendors and Rating agencies. As a reaction to this lack of transparency, the International Sustainability Standards Board (ISSB) was launched during the COP26 summit in Glasgow on November 3, 2021, to meet this demand. The idea of

The way active managers thought and spoke about ETFs changed when ETFs started to gather significant assets under management. At the beginning, ETFs were seen as a gimmick that would be used by a small number of investors. As time went by, however, active investors realized that ETFs have the power to eat out a large portion of their revenues and so they started to say ETFs represented a threat for the financial markets. As a result, there were several investigations from market regulators on the impact of ETFs on markets in times of turmoil, as well as on more

When the Wall Street Journal published an article about the SEC’s investigation into a possible overstated declaration on the efforts to integrate ESG criteria at German asset manager DWS Group in August 2021, many market observers had to catch their breath. This is because the case could have consequences for the overall fund management industry that are not immediately apparent. The investigation is based on claims by the former head of sustainability at DWS, who alleged in an interview with the Wall Street Journal that the asset manager overstates how the firm uses sustainable investing criteria to manage its investments.

By observing the current trends in the European fund industry, I have the feeling that sustainable investment strategies will become increasingly focused on environmental aspects—the E in ESG—instead of taking a holistic view. This trend is obviously driven by the decision of the EU Commission to focus its action plan on financing sustainable growth on environmental aspects, as the EU wants to be the leading economic area with regard to the reduction of greenhouse gas emissions in the fight against climate change. This is not only true when it comes to fund launches—even established funds are getting repurposed to meet

Sustainable investments based on environmental, social and governance (ESG) criteria are the hottest topic in the European investment industry. But as there is no single definition of what an “ESG investment” means exactly, there are many different approaches in the market. The wide range of criteria to select securities that are sustainable from the investment manager’s point of view is confusing for investors and investment advisors. Even the recently introduced Sustainable Financial Disclosure Regulation (SFDR) might not be able to avoid greenwashing. Therefore, there is a lot of responsibility on the shoulders of investment advisors and fund platforms when it

Transparency is one of the best ways to build trust between a customer and a corporation. Since this is quite old guidance, one might be wondering why the financial industry in general, and the fund management industry in particular, are so reluctant to offer the most transparency possible to their investors. Managing money for a client is a very sensitive task that needs a large amount of trust. This becomes especially true for sustainable investment strategies such as ESG or impact investing, because these strategies are often based on the values and beliefs of the investor. In addition to this,

Although the investment industry is normally not a target for public protests or activist campaigns, we witnessed some actions taken by these groups over the course of 2020 regarding the ESG strategies of some asset managers and their ownership of stocks from oil, gas, and coal companies. The ultimate aim of the activists is to put so much pressure on the respective asset managers that they sell their holdings in fossil energy companies. The announcement that ExxonMobil will be replaced by Salesforce (a software company), after being a member of the Dow Jones Industrial Index for 92 years, was widely

The global fund industry has come under pressure as asset managers have witnessed an increasing demand for ESG investments. An increasing number of investors want to make a positive impact on ecological and/or social goals with their investments. Therefore, they would need more transparency on the integration of ESG criteria within the portfolio management process, as well as on the voting and engagement policies and other activities of the respective asset managers. Despite the increasing demand from investors, some asset managers are still quite reluctant to report on their policies and activities. One example for this would be a report

Masayoshi Son’s frivolous tech bets have put investors on edge. A move by his $75 billion SoftBank Group to buy back up to 500 billion yen ($4.8 billion) of stock over the next year could do the same. The repurchase plan, announced on Friday, is partly a bow to Paul Singer’s pushy activist hedge fund Elliott Management, which has amassed a near-3% stake and wants it to buy back as much as $20 billion. In a plunging market, though, SoftBank could struggle to sell assets at decent prices, which would be the ideal way to fund the move. The timing

With the announcement that BlackRock will make sustainability its new standard for investing, the debate about ESG integration has reached a new level. Even as there has been a lot of talk about the integration of ESG criteria before, the self-declaration of the largest asset manager in the world to integrate ESG in all its active portfolios and advisory strategy by the end of 2020 might be a game changer, as this has a lighthouse effect and may force other large asset managers to do the same. In addition to its commitment on the integration of ESG criteria, BlackRock will