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Amundi Investment Talks 12
Amundi Institute, Investment Talks
Thursday, May 27th
11:00am (CET)
Our Speaker - Vafa Ahmadi - Managing Director, Head of Global Thematic Equities, CPR AM
Bastien Drut - Senior Strategist
In this week's call, Vafa Ahmad and Bastien Drut
gives his views on some recent market events.
Dear All,
Please see below a brief summary of our 3 Key takeaways and a link to the call recording.
Join us next week when we will be talking to Valentine Ainouz and Gregoire Pesques who will be discussing market conditions for global credit and how best manage the first steps on the "road to recovery".
Key Take-Aways
Covid-19 crisis and thematic investing
We believe that Covid-19 could be an accelerator for the thematic investing trend. Environment and climate change are at the core of the current crisis, as the cost of disasters rise, and as academic studies show strong links between the outbreak of a pandemic, deforestation, and destruction of animal species. The last two support transmission of diseases within animals, and also from animals to humans. Studies also show that climate change and extreme events can cause animals to migrate and this causes disease migration. Secondly, this crisis will likely also exacerbate income inequality by causing large-scale unemployment — the first source of inequality — in the developed world. From an investing standpoint, historically there has been an inverse relationship between income inequality and GDP growth, with rising inequality negatively affecting GDP growth. Therefore, we believe that actions on climate change and income inequality will go hand-in-hand with sound investment decisions.
Furthermore, we believe that climate change and rising inequalities are at the forefront of the current crisis. Our two funds, CPR Invest - Climate Action and CPR Invest - Social Impact, are designed to help investors contribute towards making an improved climate and social impact, while at the same time benefitting from Amundi’s extensive research capabilities.
CPR Invest - Climate Action
Our fund seeks to address one of the major SDGs of the UN about climate change and our approach has been to comply with the Paris Climate Agreement. We believe that a key question here is whether we can have a fund that focuses only on the green part of the equation and invests only in companies that make solar panels and wind energy. The answer is no, because, if we don’t invest in other companies (oil or steel), we would not have the voice necessary to bring about a positive change. However, we apply a strict methodology including, partnering with CDP for ratings, applying Amundi’s own criteria, and investing only in highly rated names. Our eligible universe is an intersection among these three factors – CDP ratings, Amundi ESG ratings, controversy filters. An example of a company eligible for our fund is a US retailer that reduced its carbon footprint by using more renewable energy and adopting optimal transportation modes to reduce transportation and distancing. As a result, we have been able to show that we can bring down carbon emissions while staying invested in a global equity fund.
CPR Invest - Social Impact
We believe there are five main pillars of inequality – income and labour, fiscal policy, access to health and education, diversity, and basic needs. Our methodology includes ranking 48 countries and 3000 stocks according to these five pillars. For instance, if we talk about income inequality and labour market, for countries that have minimum wage, this would translate into our assessment of the pay gap between CEO salary and the average employee salary. For fiscal policy, tax evasion is another way to measure it. As a second step, we exclude what we consider the worst 50% of all stocks (on basis of our inequality scores) which means all companies listed in E and D categories, and some in C, are excluded. This allows us to focus only on the more demanding names. Finally, we invest only in a company which will score better than its home country.
IMPORTANT INFORMATION
This material is for Professional Clients only and is issued by Amundi Asset Management. Unless otherwise stated, all views expressed are those of Amundi Asset Management as at the date of publication. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Past performance does not guarantee and is not indicative of future results. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. This material does not constitute investment advice or an offering of any investment fund shares or units and does not take account of the investment objectives or needs or suitability requirements of any specific investor.
