ESG funds had a terrible year but traders kept investing anyway – CNN

A version of this story first appeared in CNN Business’s Before the Bell newsletter. Not a subscriber?can sign up HereYou can listen to the audio version of the newsletter by clicking the same link.

New York

ESG fund — Investments that assess companies using environmental, social and governance factors — Turbulent 2022Also, while doing so, they performed in line with the general market and attracted new funding. This bodes well for the future of responsible investing.

what’s happening: Russia’s war in Ukraine has forced traders to reconsider investing in certain energy and arms stocks.That increased scrutiny also affected political difference He opened the door to the world, focusing on ESG investment. voice critic.

Responsible investment funds also faced strong economic headwinds. These funds’ heavy investment in technology stocks and the lack of energy stocks (which were the only positive sectors last year) led to notable losses across his ESG funds last year.

the energy is Best performing market sectors In 2022 it will return about 66%, Broader tech sector We lost 28%.

Still, sustainable investments produced returns similar to the market. Morningstar’s U.S. Sustainability Index fell 18.9% in 2022. The S&P 500 is down his 19.4%.

According to Refinitiv Lipper data provided exclusively to Before the Bell, ESG funds attracted positive investment flows globally, even as funds were drawn from a wider range of funds.

Institutional investors such as hedge funds selling stock I had cash instead. Goldman Sachs reported that the fund increased its cash holdings to about 2.5% of its total portfolio last fall. This is one point higher than at the end of last year and the highest level since early 2020.

However, ESG inflows continued to be strong, especially internationally. ESG accounted for his 65% of all flows to European ETFs in 2022, according to Morningstar data.

To the point: “The overall conclusion from 2022 is that while ESG products have delivered more stable inflows and finished the year in positive flow territory, there is a broader range,” said Robert Jenkins, Lipper’s global head of research. The fund market had negative overall flows for the year.” “This is a good sign that, despite some questions and debates about ESG, underlying trends are intact through one of the most challenging investment markets of our generation.”

No free lunches, no trillion dollar platinum coins. But both are fine.

This supercoin idea is popular as a hypothetical solution to the US debt problem as the US hits its self-imposed debt ceiling again and faces the possibility of default.

Here’s an idea some Biden administration officials and Democrats are floating around. ambiguous law This allows the U.S. Treasury Department to mint and distribute platinum coins of any denomination. The Treasury said he could mint $1 trillion worth of coins and deposit it with the Federal Reserve (Fed) so the government could continue to pay its bills.

Sounds easy, right? Experts disagree. Economists say this drastic method of avoiding a default would shake confidence in the dollar and the U.S. Treasury just as much, if not more, than an actual default. Adding $1 trillion to the U.S. economy out of nowhere could also fuel inflation.

This weekend, Treasury Secretary and former Fed Chairman Janet Yellen put kibosh on the $1 trillion coin plan, explaining that the Federal Reserve is unlikely to accept it.

“It’s never taken for granted that the Fed would do that. I think something in particular is a gimmick,” she said in an interview on Sunday. wall street journall“The Fed doesn’t have to accept that…it’s up to the Fed to decide what to do.”

The Real Impact: Friday’s Yellen Spoken CNN’s Christian Amanpour The effects of a default will be felt by all Americans.

“If that happens, the cost of borrowing in the United States will go up, and all Americans will find that the cost of borrowing goes up, too,” Yellen said. “Besides, failure to make timely payments, whether it’s bondholders, social security recipients, or the military, could undoubtedly cause a recession in the U.S. economy and a global financial crisis. ”

The dire warning of the debt ceiling problem not newmy report Colleague Alicia WallaceLawmakers have reached agreement in the past, and Yellen’s public estimates show that this Congress will take some time to reach agreement on whether to raise or suspend the debt ceiling.

Brazil and Argentina are preparing for a new common currency, according to an article written by Brazilian President Luis Inacio Lula da Silva and Argentine leader Alberto Fernandez.

“We intend to overcome exchange barriers, simplify and modernize rules, and encourage the use of local currencies,” they wrote in an article published this weekend. Argentina website Perfil.

“We also decided to advance discussions on a common South American currency that could be used for both financial and commercial flows, reducing cost operations and external vulnerabilities,” they said.

Lula also mentioned the idea of ​​a common currency during his campaign, and politicians from both countries discussed the idea in 2019, but it was rejected by Brazil’s central bank.

Argentina’s December inflation rate was 94.8%.

Leave a Reply

Your email address will not be published. Required fields are marked *