The pandemic, along with its disruption, also opened windows to many opportunities. Innovation and new ideas are the key words. Sustainability is not a new idea; however, its focus has accelerated with the pandemic and incidents triggered by climate change. Nations and organizations are adopting ESG measures and bringing its importance to the forefront. Its incorporation into investment strategies has further emphasized its importance. The assets in sustainable funds have crossed USD 2.7 trillion, with over 5,900 funds.1 Europe dominates both in terms of assets and products, followed by the U.S. S&P DJI has had a long history of providing ESG indexing solutions, with some prominent indices such as the S&P 500 ESG Index, S&P Paris-Aligned & Climate Transition Index Series, and a host of options across core, thematics, factors, and fixed income.
In their quest for innovation, providers of financial strategies are evaluating options like the S&P Kensho Indices, which capture the industries and innovation of the fourth industrial revolution. This new generation of indices, powered by artificial intelligence, is designed to track innovation systematically and is helping market participants adopt a quantifiable framework to understand and measure innovation.
Can Passive Be the new Active?
The strong growth in passive investing is encouraging its prospects. India is seeing a heightened interest and the resultant product issuances. Active outperformance is being challenged by indexing strategies. The road to passive investment styles dominating markets is a long one, but with new milestones, there is optimism to get there.
1 MorningStar, https://www.morningstar.com/lp/global-esg-flows-, Global Sustainable Fund Flows: Q4 2021 in ReviewThe posts on this blog are opinions, not advice. Please read our Disclaimers.