The Future Of Investing In The New Normal

Issue 60

If you follow Rutherford Hughes on LinkedIn or Facebook, you will notice that we are promoting ESG investing as a concept worthy of merit.

I should explain that ESG stands for Environment, Social and Governance. We covered the subject in the last Northern Insight edition, and it has everything to do with the companies you or your pension scheme are investing in. ESG is a risk rating applied to a fund to indicate the potential for damaging the environment, how well employees and supply chains are looked after and how robustly the control mechanisms operate.

So why is it being revisited again so soon?

We are now just over halfway through a tumultuous year, one that we have not seen since the Financial Crisis, starting in late 2007. However bad things are and however long the pandemic lingers, we learn from our mistakes and we start again and make the World a better place to prosper, until the next time.

In 2007 it was the banks that were widely reported as the problem with reckless lending and a lack of liquidity. We corrected the problem by altering our diligence and capital adequacy. We separated the corporate and domestic lending from avaricious trading, and we recovered. We now must deal with the after-effects of a global pandemic but with a vaccine and an altered way of life we will recover again.

The point is recovery is not an option. Time scale is yet to be determined but recover we will. The last 100 or so days has taught us some valuable lessons, some of which will stick in a reformed way we do business. Six months ago, you would have laughed at the justice system being conducted via Zoom or the thought you can no longer routinely make a Doctors’ appointment without a video call.

The plain truth is before us, less office time, less commuting and more working from home yields less pollution and a superior work life balance. Why ESG investing is so important is that it seeks to measure the progress of the businesses we invest in and how they care for the things that are increasingly important to us; the environment, the people and the strength of their operational control.

We at Rutherford Hughes have operated a portfolio management service with a tried and tested methodology proved over more than fifteen years. We have found, since the ESG ratings became available last year, an increasing number of consistent high performing funds have a low ESG risk rating.

We understand the trepidation of investing in uncertain times. Experience tells us that it is the right time to continue investing as in five years’ time the World will be a different place. The one thing we are absolutely sure of is that the sustainability of the businesses we invest in will be the security of our future and that is why we think the ESG rating is so fundamental.

If you would like a without obligation chat about how you could make the best of ESG investing, then please call.

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