The ESG Opportunity 

With over 75% of individual investors expressing an interest in sustainable investing, it is clear that investor demand for  Environmental, Social and Governance (ESG)  investments is real and growing1. Yet, remarkably, only 36% of financial advisors are currently offering an ESG solution to their clients and less than 8% of co-sponsored retirement plans offer even a single ESG fund2.  In that disconnect lies opportunity. 

The three main concerns advisors have with environmental, sustainable and governance investing are a lack of  transparency,  performance  concerns and client  demand.  

Transparency:  Wall Street has an ironic propensity to flood a new marketplace with confusing jargon.  Advisors looking to understand the sustainable investing landscape are met with acronyms like ESG, RI, SRI.  Further, the lack of universal standards defining what constitutes an ESG investment has kept advisors from pulling the trigger.  However, as the ESG opportunity expands so does the transparency improve.  

Performance:  Advisors are understandably concerned that adding a layer of investment criteria into the security selection process might be a hindrance to the overall performance of their clients’  assets.  However, according to an article in InvestmentNews2, recent data from Lipper suggests that ESG investors may not be making a  trade-off  between their asset performance and their impact investing.  In the five-year period through 2018, the average return on ESG equity funds was 3.92%, the same return of their non-ESG peers2.  What’s more, ESG funds averaged a 1.03% expense ratio, 9 basis points cheaper than the non-ESG expense ratio!2

Demand:  The popular belief among advisors that ESG demand is being driven by  millennials  is unfounded. With 74%2 of individual investors expressing an interest in the impact of their investments, it is clear that demand for sustainable investing is widespread.  Given that future investment asset growth will be driven by younger investors, there is opportunity for advisors that embrace ESG. 

At Dana,  we believe that many ESG factors impact the financial well-being and returns of corporations and their investors. This is in keeping with our mission to act in the best long-term interests of our clients.  If you would like to learn more about the Dana Epiphany ESG Equity Fund,  please click here  or  contact us.   

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Dana Large Cap Equity Fund top-ten holdings as of June 30, 2019: Apple, Inc. (2.24%), Microsoft Corp. (2.21%), Alphabet, Inc. Class A (2.13%), Facebook, Inc. (2.12%), Stryker Corp. (2.10%), CDW Corp. (2.09%), Thermo Fischer Scientific, Inc. (2.07%), Zebra Technologies Corp. (2.04%), Broadcom, Inc. (2.03%), Comcast Corp. (A) (2.02%).  

Dana Small Cap Equity Fund top-ten holdings as of June 30, 2019: Boot Barn Holdings, Inc. (2.03%), Rudolph Technologies, Inc. (2.02%), Southwest Gas Corp. (2.01%), Outfront Media, Inc. (2.01%), EastGroup Properties, Inc. (1.99%), CoreSite Realty Corp. (1.98%), ANI Pharmaceuticals, Inc. (1.91%), Chesapeake Utilities Corp. (1.91%), Rapid7, Inc. (1.91%), Stag Industrial, Inc. (1.90%).  

Dana Epiphany ESG Equity Fund top-ten holdings as of June 30, 2019: (3.54%), Microsoft Corp. (3.13%), Apple, Inc. (3.08%), Visa, Inc. (3.04%), American Express Co. (2.89%), Nexterra Energy, Inc. (2.87%), Intel Corp. (2.80%), Automatic Data Processing (2.58%), PepsiCo, Inc. (2.55%), Mastercard, Inc. Class A (2.47%).  



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