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Tuesday 07 February 2023
February 2023 | The massive inflows into ESG funds in recent years have led to market crowding and potentially unreasonable valuation premiums for “ESG Leaders,” or companies with the highest relative ESG ratings. In the US, that group of companies is disproportionately comprised of asset-light, high-growth companies that were able to embrace ESG policies and related disclosures relatively easily. We believe the shift from growth to value will sustain itself for years, and that by incorporating forward-looking ESG analysis, investors can identify future ESG Leaders—or “ESG Improvers”—in the value side of the US stock market.
01 | As the US economy and society continue to evolve, corporates and asset managers are faced with navigating newer environmental, social and governance (ESG) risks, opportunities, and shifting end-investor preferences.
02 | The adoption of sustainable business practices is growing more rapidly than data can dynamically capture, making it critical for investors to identify companies that strengthen their business models by incorporating sustainable practices.
03 | We believe that shifting ESG analysis from a current, high-level ESG snapshot to a forward-looking, bottom-up approach can help investors identify companies that are positioned to profit in the future from their ESG momentum.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of February 6, 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.
The current US debt ceiling was reached in January and the US Treasury warned that it would run out of cash to meet its expenditure commitments around June 1st, although a precise date is impossible to predict. The Republicans’ initial proposal asked for spending cuts to the tune of a 1% limit on the annual growth of nominal government expenditure over the next ten years. This fiscal contraction, along with a tight monetary stance, would be negative for economic growth. However, a default would be even worse for the economy.
Our assessment is that most banks are much better prepared to withstand financial volatility today than they were in 2008-9. As a result of the systematic application of much greater regulatory oversight, US banks have much higher levels of equity capital, better funding and liquidity, less leverage and much lower asset risk. With the potential for stronger supervision and regulation across the sector, we suggest investors carefully select securities from larger, well-capitalized banks with diversified business models and conservative lending strategies.
By incorporating both a fixed income and equity component, equity-linked notes (ELNs) can allow investors to benefit from higher interest rates while also participating in equity market performance. Learn why ELNs can be attractive investments in today’s economic environment.
Before investing, consider the product's investment objectives, risks, charges and expenses. Contact your financial professional or Amundi US for a prospectus or summary prospectus containing this information. Read it carefully. To obtain a free prospectus or summary prospectus and for information on any Pioneer fund, please download it from our literature section.
Securities offered through Amundi Distributor US, Inc.
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