Is divestment always a good strategy?
Genus Capital releases divestment report with findings supporting long-term success of divestment strategies
Source: gender capital
VANCOUVER, BC, March 22, 2022 /CNW/ – Divestment is not a new concept, but it has been particularly hot in recent weeks. the Russia-The Ukrainian war has recently called into question the effectiveness of divestment from fossil fuel-focused stocks as investors watch energy prices soar. Although the short-term effects of these events have had a negative effect on the performance of divestment strategies, Genus’ research calls this into question, suggesting that in the long term, divestment remains a solid approach to investing effectively in the world. goal of sustainable growth. .
Today, Genus Capital published its 2021 disposal report, with eight-year fossil-free investment data. The report shows that divestment from fossil fuels not only has a positive effect on returns, but also dampens volatility and increases portfolio resilience. Investors who have exited fossil fuels from April 30, 2013 for September 30, 2021using Genus Capital’s Fossil-Free CanGlobe Equity Fund, generated an annualized return of 13.54%1,2,3 while making a positive contribution to climate-focused initiatives. Genus Fossil-Free CanGlobe Equity Fund Outperformed its Benchmark Returns4 (12.48%) and the S&P/TSX Composite Index (9.07%), both of which include coal industries and major carbon producing industries.
“In previous years, divestment adoption among investors has been clouded by misconceptions that reducing exposure to the fossil fuel value chain negatively impacts annualized returns. Data from our Fossil Free fund continues to show that divestment pays off over the long term.
Due to the pandemic, we have also captured in our report the increased resilience of investments that consider environmental, social and governance (ESG) factors.
Canadian investors are increasingly aware that divestment is not only a socially or environmentally responsible decision, it is also a smart decision.
The report definitely shows that divestment is still viable. This position is supported by the average annual returns of 13.54% of the flagship sustainable fund Genus over the last 8 years.
“The popularity of sustainable investing continues to accelerate; not only do Canadian investors want reliable returns, but a growing number will also consider climate change an important priority to consider in their investing decisions. investment.” said Genus Director of Sustainability Mike Thiessen.
Here are some additional insights from the research:
- Genus found that portfolios optimized with no exposure to companies involved in the extraction, refining or transportation of fossil fuels can do better than those with investments in energy companies that create massive carbon pollution. The assumption of a return penalty is not consistent with his research.
- Genus research shows that divestment from fossil fuel stocks and prudent, well-managed reinvestment in cleaner, more efficient energy solutions, coupled with active stock selection, can be a sound strategy for investors looking to avoid climate-related risks and to capitalize on investment opportunities.
- Genus believes that fossil fuel divestment has the potential to reduce overall portfolio risk (due to energy sector volatility and asset tie-up risk) with the transfer of assets from the energy sector. energy to companies in climate-friendly sectors that are strongly correlated with it.
Genus Fossil-Free Equity Funds combined Canadian and global equities into a single, optimized strategy that focused on key industries in each region, helping fill energy gaps with strong companies in other sectors economically sensitive with the potential to gain similar equity price exposure to the energy sector.
To obtain a copy of the Genus 2021 assignment report, contact Mike Thiessen at [email protected]
About Genus Capital Management Inc.
Genus Capital Management is a certified B Corp asset manager who has been involved in sustainable investing for over 30 years. Impact and sustainable investing have become the core of Genus’ offerings after decades of evolution designed to meet the needs of investors passionate about climate action. Genus Capital is a strong supporter of from Canada Divest-Invest movement with a full range of fossil fuel-free funds designed to meet the needs of investors who want to invest in a sustainable and clean energy future.
Footnotes
1 The Genus Fossil Free CanGlobe Equity Fund (25% Canada75% Global) generated an annualized return of 13.54% April 30, 2013 for September 30, 2021. The equity fund’s benchmark, against which performance is measured, has returned 12.48% for over eight years ending September 30, 2021.
2 Fund returns are presented gross of management fees and include the reinvestment of all income
3 Past performance is no guarantee of future performance
4 CanGlobe Fossil Free Equity Benchmark: 25% S&P/TSX Composite, 75% MSCI World (01/04/2015 – Gift). Previous Benchmark 35% S&P/TSX Composite, 65% MSCI World (03/31/2015 – 06/30/2020) 40% S&P/TSX Compound, 30% MSCI EAFE, 30% S&P 500 (04/30/2013 – 03/31/2015)
This information should not be considered a substitute for specific professional advice. It is not intended to be construed as the provision of professional investment, legal, accounting, tax or other advice or recommendations of any kind and does not constitute an offer to sell or buy any entity or title quoted. With all investments, there is the potential for loss. No such decision should be made without seeking specific advice.
SOURCE Genus Capital Management
For more information: contact Graham Farmer, (Marketing Associate at Genus Capital Management), at [email protected]; For a copy of the 2021 Genus Divestment Report, contact Mike Thiessen at [email protected]