This legislative update covers proposed regulation by the Department of Labor defining “investment fiduciary,” outlines SECURE Act 2.0’s optional provision regarding student loan repayments, analyzes an increasing trend of private real estate investments within defined contribution plans, summarizes new guidance from CFA Institute defining responsible investment terminology, and reviews 2024 contribution limits from the IRS.
Tag: Sustainable Investing
Livestream Videos: 2022 Investment Symposium
The presentations by our research team from Marquette’s 2022 Investment Symposium livestream on September 23rd are now available. Please feel free to reach out to any of the presenters should you have any questions.
View each talk in the player above — use the upper-right list icon to access a specific presentation.
- An Investor’s Roadmap for 2022 and Beyond
Greg Leonberger, FSA, EA, MAAA, Jessica Noviskis, CFA, David Hernandez, CFA, Evan Frazier, CFA, CAIA, and Frank Valle, CFA, CAIA - Fixed Income Alternatives: Delivering Returns in an Uncertain Environment
Brett Graffy, CAIA, and Chad Sheaffer, CFA, CAIA - Pricing Power: The Relationship Between Inflation and ESG
Linsey Schoemehl Payne and Ibrahim Rashid - 2022 Crypto Crash: Boom or Bust?
Greg Leonberger, FSA, EA, MAAA, and Nic Solecki
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Past performance is not indicative of future results. For full disclosure information, please refer to the end of each presentation. Marquette is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Marquette including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.
Sustainability Briefing – 3Q 2022
Sustainable investing is not new to Marquette. Ranging from mission-driven screening to minority-owned investment manager utilization, Marquette has been partnering with clients for over thirty years to implement investment strategies that address a myriad of environmental, social, and governance (ESG) themes. But something has shifted over the last few years, bringing ESG to the forefront of client discussions and manager presentation decks. To help clients navigate this evolving space, we will be sharing quarterly briefings that highlight trending topics surrounding sustainable investing.
In this edition:
- Greenwashing and increased regulatory scrutiny by the SEC
- ESG and sustainability-themed ETF flows
- The SEC’s recent proposed rule, File No. S7-10-22: The Enhancement and Standardization of Climate-Related Disclosures for Investors
- Business impact of increasing interest and attention to ESG themes:
• Electric vehicle adoption
• Unionization efforts
• ESG disclosures by corporate issuers
Read > 3Q22 Sustainability Briefing
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
High on Lithium
Electric vehicle (EV) sales have seen significant growth over the past several years. Recently, elevated demand has contributed to a rampant increase in lithium prices, a primary input to the batteries that power EVs. As the global transition to a clean energy economy continues, the demand for lithium is expected to rise exponentially, to the point of creating a supply shortage in the coming years. While the metal itself is not in short supply, there are limitations to the extraction process and investment in the space has yet to catch up with the rise in demand.
In the last two years, lithium prices have soared more than 700% as sales of EVs have hit record-breaking numbers. Demand for lithium, according to McKinsey & Co., is expected to increase more than sixfold to 3.3 million metric tons in 2030 from 0.54 million metric tons in 2021. Supply is currently projected to reach 2.7 million metric tons by 2030, leaving 0.64 million in demand unaccounted for. The lithium mining industry today resembles an oligopoly, with only a handful of companies responsible for the majority of global supply. Going forward, this could change as further investment is made into the space, which could in turn help normalize price levels. While mining is often thought of as the polar opposite of sustainability, lithium mining actually helps further green energy initiatives, and lithium-related investments may serve ESG-focused investors well over time.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
2021 Halftime Market Insights Video
This video features an in-depth analysis of the first half of 2021, reviewing general themes from the second quarter and risks and opportunities to monitor in the coming months. Our Market Insights video series examines the primary asset classes we cover for clients including the U.S. economy, fixed income, U.S. and non-U.S. equities, hedge funds, real estate, infrastructure, private equity, and private credit, with presentations by our research analysts and directors.
Featuring:
Greg Leonberger, FSA, EA, MAAA, Director of Research, Managing Partner
Ben Mohr, CFA, Director of Fixed Income, Managing Partner
Evan Frazier, CAIA, Research Analyst, U.S. Equities
David Hernandez, CFA, Senior Research Analyst, Non-U.S. Equities
Jessica Noviskis, CFA, Senior Research Analyst, Hedge Funds
Josh Cabrera, CFA, Senior Research Analyst, Real Assets
Derek Schmidt, CFA, CAIA, Director of Private Equity
Brett Graffy, CAIA, Senior Research Analyst
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For more information, questions, or feedback, please send us an email.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Marquette is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Marquette including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.
Sustainable Investing Among Equity Asset Classes
Sustainable investing continues to grow in both size and relevance among institutional investors and asset managers. As a matter of background, sustainable investing is a term that encompasses three broad approaches: ESG Integration, Socially Responsible Investing, and Impact Investing. As elaborated on in Marquette’s Sustainable Investing video series, the definitions of each of these terms are:
- ESG Integration: Returns-focused investing that incorporates long-term sustainability factors (Environmental, Social, Governance) into the investment process.
- Socially Responsible Investing (SRI): Investments driven first by ethical values.
- Impact Investing: Investments with the specific intent to create and measure social and/or environmental impacts alongside financial returns.
While SRI and Impact Investing are more targeted strategies driven by underlying initiatives and/or beliefs, ESG integration has allowed portfolio management teams of more traditional approaches to consider social and environmental issues in a more tangible way than in the past. As ESG factors are more ingrained in the investment processes, there will be more investment options that contribute, directly or indirectly, to some of the ideals sought after in SRI and Impact portfolios. As shown in the above chart, investors have options across the global equity universe for both ESG integrated funds as well as dedicated SRI/Impact Investing funds. The proportions of each are likely to expand as sustainability investing trends accelerate globally.
Along with this growth comes an increased emphasis on measurable impact and standardized reporting, both of which have been a challenge in the sustainable investing space. We have started to see investment managers adopt the United Nations Sustainable Development Goals (UN SDGs) as a framework for expressing the sustainable intent or reach of their portfolio. For instance, there is a growing contingent of investment managers that have mapped their portfolio holdings to one or more SDGs based on whether the firm’s product or service aided or harmed the stated end goal. We have also seen many investment managers become signatories of the UN Principles for Responsible Investment (PRI) over the last three years. The UN PRI are comprised of six foundational principles that work to support and encourage ESG investing. Another sustainable investing reporting metric that has become more readily available is carbon intensity measures. While there have been many positive developments in recent years, investors should be cognizant of potential greenwashing — disingenuous or misleading attempts to present strategies as more ESG-focused than they actually are.
Overall, sustainable investing is moving in the right direction as more allocators and investment managers realize that returns need not be sacrificed in pursuit of positive change. In fact, a fundamental concept of sustainable investing is that firms with better ESG practices tend to fare better over the long run due to a reduced likelihood of litigation, increased diversity, and capitalization on emerging sustainable technologies, among others. Marquette continues to monitor these developments and stands ready to assist clients in pursuing their sustainable investing goals.
Print PDF > Sustainable Investing Among Equity Asset Classes
eVestment Universes
U.S. Large-Cap: “US Large Cap Equity” 1,129 Products
U.S. Mid-Cap: “US Mid Cap Equity” 289 Products
U.S. Small-Cap: “US Small Cap Equity” 640 Products
International Large-Cap: “EAFE Large Cap Equity” 219 Products & “ACWI ex-US Large Cap Equity” 142 Products
International Small Cap: “EAFE Small Cap Equity” 101 Products & “ACWI ex-US Small Cap Equity” 67 Products
Emerging Markets: “All Emerging Markets Equity” 654 Products
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
Defined Contribution Plan Legislative Update – 4Q 2020
While legislators have been focused on negotiating the next round of stimulus and dealing with the implications of the recent election cycle, the U.S. Department of Labor (DOL), as the primary regulator of the Employee Retirement Income Security Act (ERISA), has been fairly active with issuing proposed changes and final rules that may impact many of our defined contribution plan clients in the past several months.
This legislative update covers recent communications regarding private investments in defined contribution plans, proxy voting guidelines, ESG considerations (an update to an earlier Proposed Rule), and 2021 contribution limits.
Read > 4Q 2020 DC Legislative Update
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
Sustainable Investing Video Series
Our Sustainable Investing video series introduces the concepts and best practices of sustainable investing to trustees, staff, and other investors. Over the past two decades, investor interest and demand for purpose-driven investment opportunities — including various movements such as socially responsible investing, ESG integration, and impact investing — has grown significantly, and Marquette now advises on over $81 billion invested¹ with some form of sustainable approach. The three videos in this overview are presented by Linsey Schoemehl Payne, who serves as vice-chair of Marquette’s Sustainable Investing Group and works with clients directly to implement and monitor sustainable investing programs.
The series covers:
- Tackling Terminology, an introduction to the terms and concepts investors may encounter when thinking about sustainable investing;
- Initiating Implementation, an overview of the process of implementing a sustainable investment program; and
- Compliance & Reporting, a summary of the various methods used to evaluate manager compliance and report on the impact of sustainable investments.
View each episode in the player below— use the upper-right list icon to access a specific presentation.
For further coverage on sustainable investing, reference our recent newsletter, Sustainable Investing in a Post-COVID World, and white paper, The Future of Investing: Sustainability and ESG Integration.
For more information, questions, or feedback, please send us an email.
¹As of June 30, 2020. A sustainable investing client is defined as a client that has one or more SRI/ESG/Impact investment.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Marquette is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Marquette including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.
Financial Factors in Selecting Plan Investments Proposed Rule
On June 23rd, 2020, the U.S. Department of Labor released a proposal to amend certain fiduciary regulation around the consideration of economically targeted investments, or those that incorporate environmental, social, and governance factors.
The purpose of this legislative update is to provide some background on ESG integration and the subsequent DOL guidance on these issues as well as a summary of the Proposed Rule and its impact on ERISA plans.
Read > Financial Factors in Selecting Plan Investments Legislative Update
For additional Marquette coverage on sustainable investing, reference our recent newsletter, Sustainable Investing in a Post-COVID World, and white paper, The Future of Investing: Sustainability and ESG Integration.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
Sustainable Investing in a Post-COVID World
Defined as an unpredictable occurrence that is beyond the scope of normal expectations, a black swan event is rare and has potentially severe consequences. Even as COVID-19 spread across the globe in late March, the level of disruption ultimately caused by the virus came as a surprise to most. The global pandemic that followed suit was certainly a black swan event with some economists dubbing it the first sustainability crisis of the 21st century.
From a market perspective, stocks experienced the sharpest sell-off in history; while no sector was left unscathed, some relative winners and losers were identified. Of note was the outperformance of sustainable investing strategies compared to their non-sustainable counterparts. The purpose of this newsletter is to dive deeper into the performance of sustainable investing strategies during the past several months and attempt to provide insight into what investors, investment managers, and companies will be seeking from a sustainability perspective in a post-COVID world.
Read > Sustainable Investing in a Post-COVID World