Welcome to our #107 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on how you can invest responsibly.
We know the vast majority of women want to invest in ESG, so how do you ensure your ESG goals align with your investments?
The good news is, this is a fairly straight forward process.
Don’t forget to (re) listen to The Purse Podcast interview with Merryn Somerset Webb: we talk about what share owners can do to reclaim their power, the fund industry and stakeholder capitalism.
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You can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
A brief guide: how to invest responsibly
What do you need to consider to ensure your portfolio meets your ESG goals?
Research shows that women want to invest responsibly. In fact, according to a study by Morgan Stanley, over 80%+ of women have said they do.
There is much debate about whether it is better to divest from fossil fuel and other non-sustainable investments or how to influence the fund industry and companies directly with your vote, as per This is Money.
So what steps can you take to make sure your portfolio is made up of sustainable investments?
Step 1: review your current investments-ask these questions
What do you personally consider important (from an ESG perspective)?
Do you (still) want to invest in the companies in your fund?
How transparent are fund managers being about how active they are in encouraging companies to be ‘sustainable’?
Have fund managers (eg BlackRock, Vanguard) held companies to account eg via implementing policies and voting?
Which companies do you want to altogether exclude? eg tobacco, oil and gas.
Review the fund’s fact sheet. According to Investment Direcor, Maike Currie from Fidelity International: ‘these will provide an in-depth look into the fund, including information on the top holdings, regions and sustainability ratings and characteristics’.
Make sure to review the goals of the fund and assess how they align with your goals.
Step 2: understand the context of the global economy & financial markets
ESG funds (UK assets under management) has grown from 2.7% in the first quarter of 2020 to 5.6% in the fourth quarter of 2021.
In the near term, ESG funds are facing a few performance challenges.
The average ESG global equity fund also has around 21% in technology stocks, which have struggled since the start of year.
Long term investors continue to be interested in ESG investing.
Step 3: review your options via your investment platform or pension. And/or write to your fund
Determine what funds and companies you no longer want to invest in and review alternative ESG options.
Check the various definitions used by funds and companies including ethical, responsible, green and sustainable.
If you are invested in a fund via eg BlackRock and lack visibility or require more information regarding ESG, write to your fund manager requesting this information. As a share owner, you are entitled to attend the AGM (annual general meeting), raise a resolution or vote on other people’s resolutions.
It is worth keeping in mind that a lot of ESG funds have short track records.
Step 4: be clear on the level of risk taking
Funds adopting ESG and focusing on responsible investments may be more volatile in the short term.
Fossil fuels and mining have been more resilient to unstable markets and in this current climate, are likely to benefit from rising commodity prices.
Investing in sustainable funds (only) may mean your investment portfolio is more concentrated ie is not as diversified. This exposes you to more risk.
Step 5: keep reviewing your holdings
Continue to check your investments and regularly review performance.
And make sure your ESG goals align with the funds you have invested in (over a given period).
What next?
(Re) Listen to our The Purse Podcast interview with Merryn Somerset Webb about how share owners can reclaim their power from the fund industry and stakeholder capitalism.
News in Brief
Financial news
The US Federal Reserve has introduced its first interest rate hike (up to 0.25%) in 3 years to ‘fight’ inflation. The Fed expects to begin reducing balance sheet ‘at a coming meeting.’ (The 7 interest rate hikes priced in for this year seem very high). US & European stocks rise in response.
Global exodus from Chinese markets prompts Xi to change tack. Beijing appeals to international investors after equities collapse. Top officials pledge more transparent and predictable policies after country was lumped in with Russia as an ‘uninvestable’ destination.
US-listed Chinese stocks jump as Beijing pledges policy support. Hang Seng Tech index gained 22%.
Nasdaq closes up 2.1% and rises 8.4% for the week. This is the best week since November 2020.
European stocks have recovered from the shock of Russia’s invasion of Ukraine. Stoxx 600 dropped 10.6% from before invasion on 24 February to the low point on 7 March. It is now right back where it started, after the biggest weekly rally since November 2020.
US February producer prices jump 10% year-on-year, another sign that inflationary pressures remain intense at all levels of the economy. Consumer inflation rose in February at the fastest pace in 40 years.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin mirrors stock rebound on Jay Powell’s (Federal Reserve Chairman) upbeat economic tone. Bitcoin has been trading in the narrowest range since 2020. The price jumped above $41,000 for the first time in a week. (See the current price of bitcoin).
On Wednesday, crypto investors shrugged off Fed rate hike as bitcoin and ether post modest gains. Bitcoin ticked up 2.6% to $40,600, and ether rose almost 3% in mid-afternoon trading New York time, according to data from CoinGecko.
Ukrainian President Zelensky has signed a bill making bitcoin and other cryptocurrencies legal, establishing regulatory agencies and investor protections.
Ethereum outflows from exchanges hit 2022 ($500m) peak as ETH price surges. (ETH has increased approximately 17% over the past week). Investors look to hold on to their crypto in anticipation of bullish price action. (See the current price of ETH).
Ethereum 2.0 is coming in Q2 and 'will lay to rest' energy concerns, according to the co-founder of Consensys, Joe Lubin.
Ethereum merge takes place on Kiln testnet. Kiln is the final public testnet before Ethereum’s transition to a proof-of-stake network. Ethereum’s multi-stage shift to a proof-of-stake consensus mechanism would validate transactions using nodes run by ‘stakers’.
Crowdfunding has been supercharged as weapon of war. Ukraine has raised $100m+ through cryptocurrencies; tech has made it more convenient. Crypto transfers take seconds not days.
'ApeCoin' tied to Bored Ape NFT ecosystem debuts with planned community airdrop. Key to the token is a dedicated decentralized autonomous organization (DAO) as well as a supporting foundation.
Coffee Break? Read This
Melinda French Gates: Courage is ‘using your voice’ to push for necessary but controversial change.
Rebecca Minkoff goes back to the metaverse with an NFT collection for crypto fashion week.
Bitcoin-friendly mayors view blockchain as a way to boost equality, diversity.
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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