Smart beta and Environmental, Social and Governance (ESG) integration have both gathered strong momentum, with significant asset growth in strategies using each discipline. Multifactor smart beta strategies, with their longer-term focus and factor diversification, provide a natural platform for the integration of ESG.
The drivers of environmental markets are deeply rooted and continue to gather momentum. Population growth, increasing urbanization, climate change, environmental policy and regulation, and inadequate infrastructure are profoundly shaping global markets.
We often use the term “underwater” to describe money-losing investments in finance. That may not be a euphemism for long. Of the world’s 15 largest stock exchanges, all but four are in coastal cities, and all could face the prospect of literally being submerged underwater as sea levels rise.
What makes for an efficient financial market? Any market participant could probably list ten things without burning a calorie, but one thing that would probably make everyones list is information. Financial markets need information in order to work efficiently.