Putting your money where the future is
TO INVEST, YOU MUST BE OPTIMISTIC
The act of investing presupposes an optimism that the future will be better than the present. It has to be if you want your wealth to grow. You therefore can’t be particularly negative about the world if most of your money is in the markets.
Many investors are taking this further. They are not just expecting a better future, but investing in a way that shapes that future.
Johan van Zyl, chief executive of Stonehage Fleming South Africa, says that this is a trend particularly being observed among their high-net-worth clients.
Increasingly, they are asking that their investments are made in a socially responsible way, and take into account environmental, social and governance (ESG) factors. Clients are also wanting to engage in impact investing, where their money can bring direct and tangible benefits to society.
“People are becoming conscious of the effects of a consumer-driven society and the huge waste that consumerism produces. This has created a greater awareness among high-net-worth clients.
“Another factor that could be playing a role is the growing wealth gap between the haves and the have-nots. This, I think, is a concern for wealthier families, both in how they are perceived by others and also in recognising a moral obligation to do good with their wealth,” he says.
The transfer of wealth to the millennial generation has also had a significant impact.
“We are definitely seeing a strong influence from millenni- als, who are changing the workplace,” says Van Zyl.
“For this generation it’s all about purpose, experiences, and living fulfilled lives. There is no question that they are putting pressure on their parents to engage in a more responsible way.”
At a simple level, clients are increasingly insisting that sustainability is properly considered, and not just short-term returns.
This is very much aligned to a trend in asset management.
“There was a time when it was popular for managers to label themselves as green funds or green investors, and we don’t see that a lot any more because almost all of them are now doing it anyway,” Van Zyl says.
“ESG and socially responsible investing are really now embedded in their processes.”