The global pandemic: The sustainable investing experience

The COVID-19 pandemic, market sell-down and subsequent recession has witnessed a growing community of investors seeking a better balance of risk and reward.

“If anything, the pandemic, and the market sell-down we witnessed in the first half of 2020 underscores the superior risk dynamics that come with a fully realised sustainable investing approach,” says Nicholas Condoleon, Portfolio Manager of the Ausbil Active Sustainable Equity Fund and Head of Research.

During the pandemic, there was a multitude of companies seeking capital to shore up their balance sheets in the face of unprecedented economic lockdowns across the world. The problem was, public information was old, and companies were hesitant to provide guidance in an environment of fluid uncertainty.

“The added discipline that comes with the greater demands of ESG integration helped us take a tighter and more demanding view on what capital raisings were genuine opportunities from a risk-return perspective,” says Condoleon. “Taking a sustainable approach also helped us stay invested for the subsequent recovery with a far more risk-aware portfolio.”

A well developed and fully integrated ESG filter has been invaluable for securing placements in only the most desirable issues, and leaving the others for less risk-informed investors.

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“In crisis, for example, we saw a very sharp focus on the simple issue of how companies treat their employees under these conditions,” says Måns Carlsson, Head of ESG Research. “Suddenly, in an environment where financials were increasingly less reliable for fair valuation of companies, tangible and intangible risks across the ESG spectrum came into stark contrast, helping reduce overall investment risk.” 

Ausbil has diligently maintained a tight watching brief on all ESG issues across the listed market. In the evolving pandemic environment of today, it has been important to ensure companies are acting in good faith, and not using pandemic conditions as a ruse for the poor treatment of workers, abuse of the environment, for lax governance, to mask poor culture, or to perpetuate poor and unsustainable business models.

Click here for more information on how Ausbil’s strategy has performed across the crisis, and how sustainable investing benefits the risk-return characteristics of your clients’ portfolios.

Disclaimer

Unless otherwise specified, any information contained in this publication is current as at the date of this report and is prepared by Ausbil Investment Management Limited (ABN 26 076 316 473 AFSL 229722) (Ausbil). Ausbil is the issuer of the Ausbil Active Sustainable Equity Fund (ARSN 623 141 784) (Fund). This report contains general information only and the information provided is factual only and does not constitute financial product advice. It does not take account of your individual objectives, financial situation or needs. Before acting on it, you should seek independent financial and tax advice about its appropriateness to your objectives, financial situation and needs. Securities and sectors mentioned in this monthly report are presented to illustrate companies and sectors in which the Fund has invested and should not be considered a recommendation to purchase, sell or hold any particular security. Holdings are subject to change daily. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance. Unless otherwise stated, performance figures are calculated net of fees and assume distributions are reinvested. Due to rounding the figures in the holdings, breakdowns may not add up to 100%. No guarantee or warranty is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained herein (any of which may change without notice) and should not be relied upon as a representation express or implied as to any future or current matter. You should consider the Product Disclosure Statement which is available at www.ausbil.com.au before acquiring or investing in the fund.

A short notice on the COVID-19 public health event, and how it can impact investments

Given the currently evolving issues around the Coronavirus (or Covid-19) globally, which has officially been designated a pandemic by the World Health Organisation, we wish to notify that, as with many firms, business may be disrupted. A public health crisis, pandemic, epidemic or outbreak of a contagious disease, such as the recent outbreak of Coronavirus (or Covid-19) in Australia, Italy, China, South Korea, the United States and other countries, could have an adverse impact on global, national and local economies, which in turn could negatively impact investment returns in any of Ausbil Investment Management Limited’s registered managed investment schemes (the Funds). Disruptions to commercial activity relating to the imposition of quarantines or travel restrictions (or more generally, an inability on behalf of authorities to contain this pandemic) may adversely impact any investment, including by delaying or causing supply chain disruptions or by causing staffing shortages. The outbreak of Coronavirus has contributed to, and may continue to contribute to, volatility in financial markets. The impact of a public health crisis such as the Coronavirus (or any future pandemic, epidemic or outbreak of a contagious disease) is difficult to predict, which presents material uncertainty and risk with respect to any investment or fund performance. You should consider the Product Disclosure Statement which is available at www.ausbil.com.au before acquiring or investing in the fund.