In this article, the authors explore six quantitative environmental (E), social (S), and governance (G) strategies to provide insights into best practices for ESG portfolio construction. These strategies offer different approaches to the trade-off between desired ESG attributes and investment performance. They conclude that fully understanding the dynamics of these trade-offs will allow investors to select the strategy that best matches their ethical and financial views.
Highfliers Drive Market Returns. Losers Drive Tax Alpha.
by Lisa GoldbergThe S&P 500 Index return was up 18.4% in 2020, even though 95% of its constituents experienced a drawdown of more than 10%. This is not, however, just another crazy thing that happened in 2020...
Free Is a Dangerous Word (Especially during a Pandemic)
by Patrick Geddes & Dan SpierIn the past 18 months, we’ve witnessed some extraordinary changes in how retail stock investors trade, from the broad shift for many brokerage firms toward zero commissions to the jump in trading by individuals in 2020, presumably a result of the pandemic...
Months ago, I saved an issue of Journal of Environmental Investing fully intending to read it—and after carrying it with me for more than 50,000 air miles, I eventually did. I’m glad I held on to it. With the proliferation of ESG (environmental, social, and governance) data, ratings, and indexes, it is helpful to see these metrics considered comprehensively and with some perspective, divorced from the marketing packaging that seems to drive much of the related discussion. In particular, the first section on The Ecosystem of ESG Data, with contributions by Dan Etsy and Todd Cort of Yale University, is particularly useful. This is not to suggest that we agree with all points made or even that within Aperio we all have a uniform view but rather that we found it to be a thoughtful presentation of the issues and a great starting point for further research and discussion.
No data set or rating is ever perfect nor removed from the subjectivity of the creator, but in order to make the most informed decisions about its use, it is important to understand what biases and limitations are built in. For each investor and user, what is acceptable and what isn’t will likely vary.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of publication and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by BlackRock [Aperio] to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.
Aperio is providing this link to a third-party website that displays a research report, article, webcast, video, or other content that we believe may be informational or educational for you. This linked content is presented by a source that we believe to be reliable, but we do not guarantee its accuracy or completeness, including any associated disclosures. Aperio has no control over the nature of the content on, or the availability of, this third-party website.
The inclusion of this link on our website also does not imply a recommendation or endorsement of any views expressed in such linked content and should not be considered: investment, tax, or legal advice; a solicitation; a recommendation of Aperio or any third-party’s services; or an offer to buy or sell any securities or related financial instruments in any jurisdiction.
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Liz Michaels
Co-Head of Aperio (Chicago)
What are your key responsibilities? As Co-Head of Aperio, I wear many hats. Our management system is designed in recognition that no one has all the skills to lead the firm. Rather, a partnership between Ran Leshem and I allows for each of us to bring our best, balancing out each other’s strengths. I oversee the firm’s marketing and strategy functions, business development efforts, and SRI/ESG investment strategies. And, of course, I throw on the hat du jour when unexpected situations arise!
Describe your key previous work experience. I model my approach to work after two disparate professional experiences. The seemingly relevant experiences were from my time spent at Morningstar and Ibbotson. There, I learned three important skills: building data sets and creating ways for investment professionals and researchers to thoughtfully utilize them; understanding financial advisors’ practices so we could best support their efforts in serving their clients; and communicating using words that engage and respect the audience and visuals that enhance understanding. The seemingly unrelated experience was from my time spent at Jellyvision, where I learned about business and a unique approach to interactive communication and education. The intersection of these two skill sets is communication, which built upon my training at the Little Red School House and the University of Chicago. These abilities have enabled me to help clients identify, articulate, and translate their values in their investment portfolios.
What is the most interesting aspect of the job to you? It has been a privilege to engage with clients who hold strong values and offer unique perspectives and worldviews. I enjoy taking those learnings and collaborating with our researchers and portfolio managers to find solutions that exclusively reflect each client’s philosophy.
Describe some noteworthy projects you have worked on that directly impact Aperio’s clients. I try to stay connected with mission-aligned investors—to understand what is important to them and how they are thinking about reflecting their values across their wealth. I have found that immersing myself in the broader values and mission-driven ecosystem allows me to partner with my colleagues to evolve and improve our ability to support our clients in the public equity parts of their portfolios.
I have also been working closely with Ran as we think about continuing to deliver the Aperio mindset internally and externally as we grow.
What do you like most about working at Aperio? It’s a bit cliché, but what I like most about working here is the people. Folks at Aperio have chosen to be part of this firm—buying into our approach, values, and mission. It is amazing to be part of a group that is striving to do better and to do the right thing for each other and for our clients. I learn from my colleagues on a daily basis—sometimes, it’s business-related; and other times, it’s about books to read, shows to watch, and recipes to try.
We are incredibly privileged to be chosen to partner with our clients on their journey to align their wealth with their values and missions. I am constantly learning about different faiths, issues, and viewpoints.
What previous role(s) did you serve at Aperio? I have been at Aperio for 13 years, and my role has evolved as the firm has grown. Previously, I served as Head of the SRI team, now led by Nelli Oster and Mark Bateman. I was also responsible for our client relationships in the Chicago area, where I live. As Co-Head, I’ve branched out my connections—spending time with our clients across the country and ensuring we are in tune with their businesses and how Aperio can best partner with them.
What are some non-work-related things we should know about you? I have three dogs running around my apartment (yes, that is barking you hear in the background!), so I spend a fair amount of time soaking up vitamin D and walking them. I also enjoy working on my bread baking and mah-jongg game—both of which are at the same stage: I have the equipment and the directions, but things don’t always turn out quite right!
What postsecondary degrees and/or professional certifications do you possess? BA in Economics and an MBA from the University of Chicago.
Recent Blog Posts
April 25, 2018What We’ve Been Reading & Listening To
Months ago, I saved an issue of Journal of Environmental Investing fully intending to read it—and after carrying it with me for more than 50,000 air miles...
