Why ESG investing is good for your ECG (Heart)

ESG (Environmental, Social and Governance) investing refers to a class of investing that is also known as “sustainable investing.” This is an umbrella term for investments that seek positive returns and long-term impact on society, environment and the performance of the business( https://www.esg.adec-innovations.com) The link between ESG and financial performance A study published in 2014 analyzed data from 190 of the largest US companies between 1993 and 2010. It found that high-sustainability firms tended to have a higher degree of long-term planning. They also measured non-financial criteria to a greater extent than their low-sustainability peers. The researchers also concluded that high-

Rational Investors, Irrational Actions

The normal expectation is that investors make investment with their best interests in mind and that they would do any action necessary to hold that aspect as long as they are staying invested. However we have found various emotional and behavior barriers that come in the way of making sound investment decisions. One such decision was witnessed earlier this week while we were chatting with the client. Aswath (name changed) who is mid fifties client works in the IT sector in Chennai. He has his office on OMR and since he frequented the stretch for the past 15 years, he was confident that the area would boom and invested in an apartment on the same stretch some years ago (his second apartme

What’s in a Label ? Examining SEBI’s new Risk Classification of Funds

Mutual Funds are subject to market risks, please read the scheme related offer documents before investing. This Is the standard safe harbor statement of all Mutual Fund advertisements. Yet most investors who invest do not have the time nor the energy to go through this in detail and therefore end up making investments which are high on risk even if their temperament for risk taking is low. To simplify product communication and help investors understand the risks of a scheme at a glance, Securities and Exchange Board of India (SEBI) has a system of product labelling in place that ensures the investor makes investments in mutual fund schemes that correspond to the investor’s risk profile. The

Risk & Uncertainty

As Investors that invest our money we are well aware that our investments are exposed to both Risk & uncertainty. However for most people the two terms are used interchangeably and pretty much mean the same. Let us examine if there is more to it …. Risk is the probability of an event happening at a time or not. The probabilities are known in Risk. There is a 50 % chance that the month after you have invested your money in a Mutual fund, the stock market could go down. Similarly there is a 65 % chance that a person over the age of 70 years is a diabetic and hence is susceptible to grave health hazards.. both life & medical insurance businesses are built on these probabilities. There are enoug

A Matter of Bond

SEBI has recently announced that AT1 bonds will be available for a minimum investment of Rs 1 crore..not lesser.. What is the logic of this move ? Let us understand this better ... Banks have been hitherto allowed to raise Additional Tier 1 funds ( quasi equity) as perpetual bonds with a fixed coupon. This was done to help bolster additional capital requirements of the banks without necessarily diluting their equity capital. What this meant was the Banks were free to raise the funds as per their needs and with an option to call in the investments at a time of their choosing i.e., is repay the investors the principal amount when it suited them. Since these are perpetual in nature, considere

Pain & Gain

The entire purpose of a human’s life can be summed in the simplest words that of seeking the maximum gain at minimum pain. We constantly seek out ways to reach our goals with paths of least resistance. A television remote control is a classic case. Hide the remote from yourself for a week, you will end up watching the same channel for say an hour at least. However in reality we rarely do that, we are constantly changing channels to get the best of information / entertainment that the TV has to offer. I have experiences in which I have surfed television channels for maybe an hour, without ever registering anything of value or entertainment within it. Frank Viktor, the holocaust Survi

“Mahatma on Resistance & Persistence”

On the eve of Gandhi Jayanthi, it is nice to imbibe a little bit of the Mahatma in all of us and our investing style. “First they ignore you, then they laugh at you, then they fight you and then you win.” Said the Mahatma on Resistance & Persistence needed to win a cause. Resistance : One must resist the path of common usage and seek to find a better way, when M K Gandhi was thrown out of a train carriage in South Africa, he did not accept it, he resisted it to seek a better way…. And as they say rest is history. Persistence : During the Freedom struggle, many a times when the British Govt and the Police tried to intimidate him with acts of violence, he persisted with Ahimsa ( Non Violence

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