Following the worst year ever recorded in the modern financial market history for fixed income investors, and the end of a prolonged period of zero to negative interest rates, we are experiencing an increasing market demand on bond strategies, led mostly by increasingly attractive yield perspective. In the current uncertain market environment, it is crucial for asset managers to avoid potential “bond yield trap” and invest in strategies with an appropriate risk/return profile, especially on cautious mandates.

The Sustainable Finance Disclosure Regulation (SFDR) entered into force on March 10, 2021. In particular, it requires financial players to enrich their investment policy, which must detail how sustainability risks are integrated into investment processes and they will now have to declare the negative impacts of investment decisions on sustainability factors.
In this context, FARAD I.M. developed a unique sustainable analysis service for alternatives, called GreenEthica Sustainable Scoring System for Alternatives,

The globalisation and digitalisation of trades have resulted in significant economies of scale for growth labelled stocks (the New Economy) over the last decade. In contrast, value stocks (the Old Economy) fell out of fashion amid consistent underperformance, which sent investors to capitulation grounds. This phenomenon was amplified by reflation trades and the “work from home” fad, which have both exacerbated the valuation of a plethora of high duration stocks.

In the wake of the ESG gold rush, the European Union hastened to step in and legislate the sustainable taxonomy of investment funds. The SFDR aims to standardise sustainability disclosures and help institutional asset owners and retail clients separate the wheat from the chaff. The goal of this initiative is to normalise ESG reporting and leverage the underlying power of capital markets to meet carbon emissions reduction targets.

Key words for investment managers in 2023 will not only be “inflation”, “FED pivot” and “economic growth/recession”, but also “sustainable investing”. In fact, regulatory environment pushed data disclosure spread and taxonomy is supporting asset managers to increasingly apply ESG analysis screenings. After a tremendous 2022 among financial markets, this year the investment managers could face a more favorable macroeconomic environment to re-enter among equity and bond markets with an enhanced ESG awareness. 

As is now well known, United Kingdom left the European Union in the context of the Brexit act early 2021. One of the main implications of the new regulation is that UK companies cannot anymore approach directly EU customers while doing their fund distribution businesses. 
These companies are now facing the current reality: they lost “overnight” the ability to deal directly with European customers and in many cases, at least temporarily, also the ties with even long-standing customers.

In May, the European Commission agreed on a road map to accelerate Europe’s energy transition and reduce dependency on Russia fossil-fuels by committing 300 billion euros between now and 2027. The REPower EU package will kick start a greener economic model by decarbonising not only the energy supply chain, but also the industrial landscape as well as transport and construction. We believe that the focus on energy sovereignty and climate change mitigation will remain top of mind for governments, corporates and consumers over the long-term. 

COP26 came short of expectations, to say the least, but it is worth mentioning that a growing number of investors are venturing into ESG investing. In 2021, Morningstar reported that global sustainable funds attracted record inflows of $4 trillion  in 2021

Asset management companies revenues are linked to the assets they managed. An environment like the current one with volatile financial markets and high inflation is challenging for such companies as your cost increase while your revenues remain stable or even slightly decrease depending on the type of assets you manage.

In addition, there is a slowdown in the implementation of new projects, which put additional challenges medium terms as important projects take typically months to be implemented. In this article I describe my receipt to succeed in 2023 and invite all the readers to read a “compte-rendu” or debriefing in 12 months from now.

Originally, Within European borders, the regulator has implemented broad directives useful to clarify just the minimum requirements needed to act as a portfolio manager. Over the years, some countries have adopted strict and severe minimum requirements in terms of initial approvals and ongoing checks on asset managers activities, while some other gave them the possibility to have an easier access to the profession and softer obligations to respect and be aligned with. 

Curbing global #temperature will be a grueling task for developed countries, the largest polluters, all the more so as climate change repercussions are most often felt by emerging nations before others. However, a fast and global remodeling of the #economic engine is needed to avoid irreversible consequences. In this perspective, the IPCC (Intergovernmental Panel on Climate Change) has framed five SSP (Shared Socioeconomic Pathways), or #scenarios, to estimate the level of greenhouse gas emissions under different climate policies – from most to least #sustainable.