ETHICAL FUNDS ARE NOT ONLY MORE DESIRABLE, BUT ALSO MORE PROFITABLE
Spainsif’s president, Jaime Silos, participated the last Monday, January 30, in a conference by Fernando Gómez-Bezares, Finances Professor at Deusto University, in Deusto Business School, in which he presented his last study on ESG funds – those that use environmental, social and corporative governance criteria in their investment decisions – with a clear conclusion: ESG funds are not only more desirable, but also more profitable.
In a previous meeting with the media, Jaime Silos highlighted the growing importance of Socially Responsible Investing (SRI) in Spain, and announced that Spainsif will launch a new corporate web soon that will improve the access to information.
Professor Gómez-Bezares, for his part, centered in the comparative study between ESG Funds and conventional Funds that he has directed and published, and pointed that it can be affirmed that contrary to what could be assumed based on the financial theory, the facts show that funds that invest in sustainable companies show a better performance in comparison to conventional ones.
The Professor’s study analyses two fund management key aspects: stock picking and market timing. In both cases, the ESG fund management outperforms the conventional one.
In regards to the better performance of stock picking, the Professor explained that this is due to the better knowledge managers have of the shares in which they can invest, since the universe of sustainable companies is smaller than the whole market and, in the second place, because sustainable companies show a better performance in the long term.
Regarding the market timing, the results are also more favorable for ESG funds, according to the Professor, because since they are smaller they are more manageable and flexile when it comes to the investment decision adoption.
For Professor Gómez-Bezares, managers are not completely conscious yet about the fact that ESG funds not only avoid risks, but also generate more value and are more profitable in the long term, and therefore it’s important to give the SRI importance in Spain the maximum diffusion, as it’s done from Spainsif.
Stock picking and market timing abilities of european ethical and conventional funds // Main article of the presentation//