Paul Severin interviewed Heinz Bednar, CEO of Erste Asset Management on the importance of sustainable investments.
The bribery scandal at FIFA has shown what huge reputations risks companies may face if they do business with partners that do not care about environmental, social, and corporate governance standards (ESG). The discussion about ESG has therefore gained in importance over the past months. The investors play an important part in this context, as they can themselves nudge companies towards social responsibility and transparency. Gerold Permoser, Chief Investment Officer of Erste Asset Management (EAM) in Vienna explains why the so-called engagement is important.
Developed equity markets are in the 6th year of a robust upward move. The MSCI Developed World Index rose by almost 18% per annum over the period (Mar 2009-June 2015) in Euro-terms. However, momentum has stalled in recent months. Stepan Mikolasek, new head of equity management of Erste Asset Management, names the main reasons: surprisingly weak US economic growth in the first quarter, concerns about China’s economy, the fear of a Fed rate hike and growing risk related to the Greek situation.
Construction is becoming sustainable: More and more buildings carry so-called “green building labels”, but only few of these certificates are transnational. Follow Erste Asset Management on its trip trough the green label jungle.
Eurozone government bonds have ensured very good performance returns in the past years. The asset class has benefited from the zero interest rate policy and the very expansive monetary policy of the European Central Bank.
In recent weeks the prices of bonds from Eurozone countries have gone through a correction, above all German government bonds. The reasons for the specific timing of the correction are numerous and cannot easily be pinned down. In spite of slight improvements, we do not expect an interest rate reversal for the Eurozone at this point in time. The fundamentals for such a scenario are not in place.
Euro government bonds are an important component of a portfolio. From both risk and return considerations, a diversification across a broad spectrum of assets makes sense (e.g. by adding high-yield bonds, emerging markets bonds or equities).
The latest FIFA corruption scandal holds reputation risk for sponsors. Many sponsors continue to prioritise the advertising value over the responsible organization of events. Improvements will only happen if sponsors insist on new, transparent rules.
Sustainable building means energy-efficient construction. Styrofoam insulation is usually the magic word, but it is a non-breathable material and can therefore lead to mold. Also, it can catch fire easily. Therefore, the German Steico Group has turned away from these materials, becoming one of the largest suppliers in the field of ecological building materials. With the use of wood fibers Steico provides an improved indoor climate. The material costs may be higher in the beginning but in the long run it will save costs. Energy and CO2 emissions can already be reduced in the production of raw materials, which is partly due to the fact that the wood used comes from sustainably managed forests.
Environment and sustainability are gaining more and more importance in today´s society. In this interview about his special fund, Clemens Klein reveals why solar stocks are interesting in particular.
Bond investors are faced with a difficult environment. Do corporate bonds offer the chance of a halfway decent yield?
Stampfl: The statement that bond investors are faced with a difficult environment is actually an erroneous one. A balanced portfolio consisting of bonds from the peripheral countries and the core countries across all sectors would have seen a very good risk-adjusted performance in the past weeks and months. Also, complementing the BB segment with corporate bonds generates a certain degree of surplus yield, which in funds like Reserve Corporate causes is used to boost the development. That is like switching from winter tyres to summer tyres in spring. It facilitates a smoother running and lower fuel consumption. Or, translating it to the case of the fund, it results in a surplus yield at lower volatility.