Short positions... BlackRock’s green U-turn

⬛ Investors are selling many of the funds that are most likely to beat the market in the long term, says Lauren Almeida in The Telegraph. Outflows from funds that invest in small and medium-sized British companies were substantial in recent weeks, according to data from fund platform Calastone. UK-focused funds had net outflows of £836m in April, with two-fifths of that coming from small and mid-cap funds – a much larger proportion than their share of assets under management. That reflects both the market turmoil and the grim outlook for the UK in particular – the Bank of England says that rising energy prices and the cost of living crisis could push the economy into recession later this year. Yet while small firms are often more exposed to economic downturns than larger ones, they tend to outperform on average over the long term. Smaller-company funds have nearly tripled investors’ money over the past 15 years, compared with a 100% rise in the FTSE 100.

⬛ BlackRock will vote against most climate-related shareholder resolutions this year because they have become too extreme or prescriptive, says the Financial Times. The world’s largest asset manager is concerned about resolutions that aim to stop financing fossil-fuel projects, force companies to decommission assets, or set absolute targets for reducing emissions. “We do not consider them to be consistent with our clients’ long-term financial interests,” says BlackRock. In addition, it argues that energy security requires greater short-term investment in fossil fuels following Russia’s invasion of Ukraine. In recent years, BlackRock has pushed companies to embrace green energy, with chief executive Larry Fink saying in January 2020 that “climate risk is investment risk”.