Frankincense, myrrh, or gold? Have you found the right Christmas present yet?

Frankincense, myrrh, or gold? Have you found the right Christmas present yet?
Frankincense, myrrh, or gold? Have you found the right Christmas present yet?
(c) istock
Share post:

The gifts of the three Magi to the new-born Christ Child are well known. Even back then, gold was of high value due to its scarceness and was regarded as a special kind of paying one’s respects to someone. Frankincense and myrrh have since then lost some of their appeal as gifts, but it is still customary to give gold as present at special occasions. While we know that a child would probably prefer a bicycle, a dinosaur, or a book, ours is the hope that the child will many years down the line recognise the value of the gold coin (which may have increased by then as well) and will keep it for emergencies.

A gold bullion does not only make children’s eyes sparkle

This sort of claim has been used by companies that produce gold jewellery and trade in precious metal. In the absence of a gold bullion, I can unfortunately not confirm whether the eyes of children will indeed sparkle when looking at one. The investment strategy of a certain Austrian party in recent weeks seems to suggest the claim is also true for some adults. Even though the political (colour) spectrum offers a vast bandwidth and lots of room, the priority of our analysis of gold as a topic is not to what degree it is suitable as currency during times of crises, but rather a wholistic account from an ESG perspective.

All that is gold does not glitter

Gold can quickly lose its sparkle when topics like work safety, ecological footprint, use of chemicals, and the destruction of natural habitats are addressed. However, here it makes sense not to demonise the entire sector across the board, but to scrutinise every single company. There are unfortunately significant gaps especially in workplace safety between the best and the worst in the sector. Whereas the ESG pioneer has a management remuneration regime in place that depends on the company’s safety record and, indeed, it recorded no fatal accident last year, the situation looks different for the laggard in this field. Here, the number of workplace fatalities has even increased year-on-rear, and no sufficient steps have been taken towards improvement so far. The different share price performance of the two companies shows that this is a relevant topic not only for sustainable investors, but also for the broader capital market and that ESG factors have become increasingly relevant.

Silence is silver, but speech is golden

Sustainable investment does not stop at a “clean” portfolio that only contains a few criteria of exclusion, but it also has to come with a dialogue especially with the companies that have the most catching up to do from a sustainability perspective. In this context we have had many constructive talks in 2019 and have also assumed the role of lead investor of one international investor initiative. We will be happy to let you in on more details and background information in our engagement and voting report 2020, which we will be publishing at the beginning of the coming year.

 Sparkly eyes on Christmas

Luckily it does not necessarily take gold bullions to create that special sparkle in the eyes of our loved ones on Christmas. More precious than gold – and that has not changed since the three Magi – is the time, the taking-stock, and the celebrations with our most important people. We wish you a Merry Christmas, but also time to read our next ESG Letter in 2020.


Legal note:
Prognoses are no reliable indicator for future performance.



Leave a comment Required fields are marked with *

Your email address will not be published.

Legal disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.