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In all, ESG portfolios provide opportunities for growth but come with ground-level challenges when implementing them. In order to meet client demand for investments that are personalized to truly align with investor core values, investment managers must go beyond negative screening when implementing ESG.
Performance has traditionally been the key to attracting and retaining investors. But forward-thinking managers are realizing that returns alone will be inadequate in securing emerging investor loyalty over the long haul. This generation has their own set of preferences, beliefs and habits that will likely require a shift in the investment management value proposition.
Years of helping asset managers to succeed has made me a big fan of small. Small steps are an effective means to lasting change. A narrow focus spotlights a manager’s strengths. A community approach to client interactions leads to long-term investor loyalty. Small has a big impact.
When provided with simpler access to robust data and tools to render information in multiple formats, managers are empowered to provide information relevant to their clients in new and traditional ways.
Technology is available to take the next logical step, with automated versioning of models and the personalization of customized ESG portfolios. In both cases, technology supports filtering out or diminishing holdings in "bad actors" and increasing holdings in "good actors."
Cohen & Steers tapped Archer, an operations and outsourcing provider, to get its SMA business off the ground.