For professional clients only
PI Partnership
Capital at risk. This information should not be relied upon as investment advice, or a recommendation regarding any products, strategies. The environmental, social and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.
FIVE REASONS TO CHOOSE INDEXING FOR SUSTAINABLE
Here are the five reasons why we believe sustainable indexing gives investors the clarity they need to build more sustaina- ble portfolios.
1. Indexing puts you in control of what type of sustainable investor you want to be. Sustainable investing is not one size fits all and means different things to different investors. The broad range of indices available, and the transparency they offer, allow you to pick the approach that’s appropriate for your portfolio.¹
2. Sustainable indexing can help provide a consistent approach across a portfolio. As investors transition to sustainable
investing, an indexing approach may help to ensure sustainability is expressed in a consistent way across the entire portfolio. Indices are inherently rules-based, so the screens and ESG integration they deploy are repeatable, regardless of asset class or exposure.
3. Sustainable indexing drives industry standardisation, promotes disclosure and can help motivate better corporate behaviour. We believe that indexing is bringing clari- ty to the sustainable investing space by providing transparency and accelerating the adoption of new market standards. This is one of many reasons why we believe investors will choose to put an extra 1 trillion USD into sustainable index assets in the next decade.²
1 Ways to align investment goals with iShares sustainable strategies Screened
Clients looking to exclude companies based on controversial
business practices ESG Enhanced
Clients investing to persue similar returns to a particular benchmark and maximise ESG scores
SRI
Clients seeking to achieve concentrated ESG holdings by rewarding top ESG performers
Thematic
Clients pursuing specific sustainable themes based on a company’s
operations or sources of revenue
Impact
Clients investing for a measurable
sustainable outcome alongside financial returns
Source: BlackRock, as at 31 March 2020
4. Sustainable indices have shown resil- ience in difficult times. During this year’s market dislocation, a majority of sustainable indices exhibited resilience relative to broad market bench- marks.* We believe this is because sus- tainable indices are generally comprised of companies with higher profitability and lower levels of leverage than the broader market.
Risk: Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a pro- duct or strategy.
*Source: BlackRock with Q1 2020 data from Bloom- berg and Morningstar as of May 7, 2020. Over 90% of sustainable indices outperformed their parent benchmark during this period of the heightened market uncertainty and drawdown.
5. Index fund asset managers with active investment stewardship seek to drive long-term change.
Indexing amplifies the impact of compa- ny engagements because index investors typically take a long-term view. Those who are sustainability-minded can exercise in- fluence with companies through engage- ments across environmental, social and governance topics.
To learn more about investing in sustain- able ETFs visit
iShares.com/uk
2
Past and predicted growth of sustainable index assets (2009 - 2029)
ETF Index MF $220bn $44bn
$15bn 2009
2014 2019 2024 2029
*Projected growth. BlackRock projection, April 2020, based on Morningstar data, as of March 2020. Subject to change. The figures are for illustrative purposes only and there is no guarantee the projections will come to pass.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Issued by Black- Rock Advisors (UK) Limited, which is authorised and regulated by the Financial Conduct Authority (‘FCA’), having its registered office at 12 Throgmorton Avenue, London, EC2N 2DL, England, Tel +44 (0)20 7743 3000, has issued this document for access by Professional Clients only and no other person should rely upon the information contained within it. For your protection, calls are usually recorded. BlackRock is a trading name of BlackRock Advisors (UK) Limited. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The views expressed do not constitute investment or any other advice and are subject to change. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. © 2020 BlackRock, Inc. All Rights reserved. 1230299.
Issue 98 | November 2020 | portfolio institutional | 39 $550bn* $1,200bn*
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