Sharing an episode on the growth story of India, that I recorded earlier with the CFA Society India.

In conversation with Mr. Sunil Singhania, CFA, Founder of Abakkus Asset Management and an Investment management industry veteran.

He shares his thoughts with Jolly Balva, CFA on the next decade of India's growth story. They explore the nuances of the key fundamentals drivers of growth for India, with the 'Dragon to elephant' tilt in perspective. Please read the regulatory disclosure for Abakkus at https://abakkusinvest.com/regulatory-...

The trilogy of the pandemic, monetary expansion, the geo-political developments in the last 2-3 years have had many repercussions in the global macro environment. That has bought the attention of investors towards gold for diverse reasons.
·        A big development that has been underway is that of central banks being net buyers of gold, in a trend reversal, since last few years. China has been on a buying spree for ten consecutive months. Central banks overall added over 1100 tons of gold, more than double the annual average of many decades.
·        Emerging market central banks in particular have been raising the proportion of gold as a reserve asset. Though it stands currently much lower as compared to developed markets, is de-dollarisation a motivation?
·        A relatively new category of funds viz ‘Multi-asset’ grew quickly in the last year in India with gold as a third asset class, as equities and bonds both underperformed.
·        Hindsight is as important, and we delve into the performance of gold in diverse economic environments.

Here's a podcast episode i recorded with the CFA Society India.

China's economy is not only slowing (to the extent of warranting a surprise admission by Xi Jinping himself), but also going through long-term structural changes.

In this episode Herald Van Der Linde, the author of ‘Asia’s Stock Markets From Ground Up’ shares his thoughts on China with Jolly Balva, CFA.

We talk about the economic landscape over the short term as well as the long term drivers of structural change. These include the sectoral aspects, the policy response as well as the geopolitical implications for its economy. The conversation then goes on to cover what these updates might mean for its markets

In the history of the Federal reserve hiking rates, for many decades, invariably have affected the emerging markets. While the currency depreciation and outflows have declined, there are uncertainties with regards to the impact of a global economic slowdown on growth this year.  In this episode I am joined by Ayesha Tariq, CFA. She shares valuable insights on the current macro-economic environment in the US.

We talk about :

-          What makes the current macro situation unique vs history

-          We have come so far with Dodd franks act in effect post the 2008 crisis, yet the stress tests didn’t suffice

-          Why hedging, though available as a tool to face the unprecedented rate hikes and resulting losses in history, could not have been deployed

-          The upcoming liquidity tightening and its impact on lending

-          How are businesses and individuals placed, in face of the current macro environment

-          The likely trajectory for inflation, with sticky components in perspective and earnings slowdown

 2022 was one of the worst years for portfolios consisting of only stocks and bonds, as both went down together. Asset allocation plays an important role in determining portfolio returns. Multi-asset class investing has become quite popular, in the world, after the global financial crisis in 2008. Even in India there is a lot of interest lately, with new NFOs coming in this category. They grew over 30% in 2022, and are around an AUM of 24k crore.

The global economy may have come out of the woods in the year 2023, but uncertainties remain. If the recent episodes of volatility have taught us one thing, it is that diversification is important. And that only stocks and bonds may sometimes not be enough. In this episode, I take a look at the current investing environment and a multi-asset approach for investing.

In the previous two episodes, we discussed about what sustainable investing is about and why it matters. We also looked at what are the controversies around it and the regulatory updates to address greenwashing. There is almost a consensus amongst the investing fraternity that ESG is now mainstream.

Sample these facts.

As per the US SIF “Trends Report”, Sustainable investment assets in the US amounted to $8.4 Trillion in 2022.

As per a PwC survey ESG assets domiciled in Europe could grow to between $7.8 to $9.5 trillion by 2025 and account for up to 56% of total European mutual fund assets, against 37% at the end of last year. Against that backdrop, almost 72% of European asset managers were willing to halt all non-ESG product launches, with more than 60% planning to do so by the end of 2024. The institutional investors elsewhere too have similar plans, and it is likely that in a few years from now, most of the investment houses shall have their investment products and processes fully integrated with sustainable criteria.

Active ownership is witnessing a whole paradigm shift. As per the US SIF “Trends report” from 2020 through the first half of 2022, 154 institutional investors and 70 investment managers controlling $3 trillion in AUM led or co-led shareholder resolutions on ESG issues. The leading ESG issue raised in shareholder proposals was on ensuring fair workplace practices, and particularly on ending de facto discrimination based on ethnicity and sex.

It is thus imperative for investors to understand the approaches that are available, in order to understand and align their own investing goals.

In this episode, I talk about the below mentioned approaches to sustainable investing (coming to a mutual fund house near you, if not already there) :

1. Exclusionary screening

2. Best in class selection or positive screening

3. ESG integration

4. Thematic investing

5. Impact investing

6. Active ownership or corporate engagement

While the last 2-3 years saw a rampant growth of ESG funds, concerns about greenwashing started rising in 2021. Even as the world continues to evolve the investing framework and regulation on it, there have been instances of mislabeling. Some of the developments this year in ESG have been on the Regulation front. Incremental regulation and scrutiny is amping up the crackdown on Greenwashing.

While the EU’s SFDR (sustainable finance disclosure regulation) rules came into force in 2021, the updated guidance earlier this year has created a massive stir amongst big investment firms world over. It made them reclassify their funds, with assets of trillions of dollars being downgraded from ‘article 9’ to ‘article 8’.

The Securities and Exchange Commission (SEC) in the US, created the Climate and ESG Task Force within the Division of Enforcement to identify “material gaps or misstatements in issuers' disclosure of climate risks under existing rules, and disclosure and compliance issues relating to investment advisers' and funds' ESG strategies." The SEC is actively scrutinizing ESG claims by corporates as well as registered investment firms and advisers.

In this episode, I take an overview on :

a) What is greenwashing, its examples

b) Key regulation that is facilitating the ESG ecosystem world over, including

- EU taxonomy

- SFDR

- Low carbon benchmarks regulation

- Green bond standards and other labels

The whys and wherefores of ESG Investing 

The 2020 pandemic bought about a paradigm shift in many aspects of human existence. In the world of investing, it catapulted sustainable investing to the mainstream. The names by which we know it and the reasons why we pursue it, may change over time. But this concept of directing finances towards businesses that align with our values, or boycotting those that do not, is rather old. It is now known as ESG investing, where we consider factors related to Environment, social and governance, beyond just traditional factors. These are non-financial aspects that have material impact on the financials of a company.

There have been record inflows into ESG in the last two years. And like anything that sells as hot cake, the fake claims are also on the rise, making some people call ESG, a fad.

At this juncture, we are inundated with dynamic developments in this field. These are driven by investors, consumers, employees, regulatory authorities.

In this episode, I cover the whys and the wherefores of ESG Investing.

Key topics include :

a) The history

b) Key global developments that have led to a mass mobilisation of capital towards sustainability in the last few years

c) Material ESG issues and risks

d) Key ESG disclosures and policies in India

e) Conclusion