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Alger on the Money – Money in Motion — ESG is a Destination

16 June 2017

One of the largest transfers of wealth—an estimated $30 trillion over the next few decades—will occur as Baby Boomers pass money to younger generations. What do you think the younger generations value?

 

  • U.S. assets invested according to ESG—environmental, social and governance— principals soared to $8.7 trillion, an increase of 33% from 2014 to 2016, as the high level of interest in sustainability has translated to actual investing.1
  • Many younger investors are mindful of a company’s social and environmental impact when making investment decisions. Two reasons they cite are “It’s the right thing to do,” and “Companies that have a positive impact have better financial performance.”2
  • An eight-year study3 released in 2016 assessed the hypothetical performance of a portfolio that “tilted” toward, or over-weighted, ESG names. The portfolio’s return exceeded the MSCI World Index over the eight-year period by 1.06% per year, about 40% of which was due to stock-specific contribution.

1 U.S. SIF Foundation, “Report on Sustainable and Responsible Investing Trends in the United States,” 2016
2 2016 U.S. Trust Insights on Wealth and Worth Survey, 2016. Of Millennials, 28% own ESG, 57% are interested in adding ESG. Of Generation X, 24% own ESG, 31% are interested in adding ESG.
3 The Journal of Investing, “Can ESG Add Alpha,” Zoltan Nagy, Altaf Kassam, Linda-Eling Lee; Summer 2016

> Download Alger On the Money, A view on the U.S. Market

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