June 17, 2021
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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.
Investment firms unite on climate change push
More than 450 investment firms have signed a letter urging governments around the globe to improve climate-related regulation. The group of businesses warned governments that their ability to properly allocate the trillions of dollars needed to support the transition to net-zero was being hampered by a gap between commitments and the actual reduction in emissions, which needs to be urgently addressed. To achieve the net-zero emissions by 2050 target, they urge governments to implement domestic policies to help achieve these goals. (From FT Adviser, 15th June 2021)
How well are travel insurers covering customers for Covid-related claims?
Which? analysed 263 different travel insurance policies and found only two gave travellers all-round financial protection in Covid situations, calling into question various providers’ claims that their policies provided appropriate cover. It has been argued that while some travel insurers said they did offer ‘Covid cover’, many policies still excluded many plausible and potentially costly scenarios. As holiday destinations continue to shift on the traffic light system, it is likely that this issue will become even more pronounced. (From BBC, 15th June 2021)
Private capital industry soars beyond $7tn
Explosive growth in areas such as private equity lifted the size of the overall private capital industry to $7.4tn at the end of 2020, according to Morgan Stanley. The bank expects it to hit $13tn by 2025, and increased demand for higher-returning strategies has prompted big asset management groups – including Schroders and JPMorgan – to launch new divisions specialising in this space to counteract the profit pressures on traditional investing avenues. Although still dwarfed by the traditional asset management industry, private capital is now growing as quickly as cheap, index-tracking passive investing. (From Financial Times, 11th June 2021)
Fund managers urged to reveal if they have skin in the game
Richard Wilson, chief executive of Interactive Investor, has launched a campaign to force individual fund managers to disclose how much they personally hold of the funds they manage. Writing to the Financial Conduct Authority, Wilson has called for a change in the disclosure rules, arguing that his 350,000 retail clients in funds and investment trusts deserve to know how much “skin in the game” the stewards of their money have. It is speculated that portfolio managers personally invested in their strategies do better, and there is evidence that end-investors like managers to share in their failure as well as their success. (From The Times, 15th June 2021)
Three-fifths of global savers want to invest more sustainably
60% of savers are more interested in investing sustainably than they were before the Covid-19 crisis, according to UBS’ Investor Watch survey. The crisis of the last 18 months has made investors reassess their financial positions, with 90% of wealthy people agreeing that the pandemic has made them want to align their investments with their values. Nearly eight in 10 said that the global health crisis has made them re-evaluate what is most important to them, and almost half plan to increase their charitable giving. (From International Adviser, 14th June 2021)