General chit chat thread., page-1545

Another interesting excerpt from a piece in todays' AFR- "Big bets on fossil fuels, iron ore pay off for fund managers"

ESG factor

The jump in energy commodity prices has also forced investors to reckonwith the growing chasm between those that include fossil fuels and otherbusinesses linked to climate change, and those who avoid them.

Environmental, social and governance – or ESG – investing has emerged asone of the hottest corners of the investment business, drawing in large sums ofcapital for funds that typically exclude oil and gas companies.

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Fund managers, including BlackRock, the world’s largest, have warnedabout the potential for frozen assets in fossil fuel companies and have begunto exclude certain fossil fuel stocks from actively managed portfolios.

The structural shift in capital flows has made the fossil fuel tradeeven more lucrative given many investors, including large institutionalinvestors, view investments through an environmental, rather than fundamental,lens.

“People are investing in this industry based on how they feel about thesector rather than the facts and the intrinsic value of the earnings,” MrGoldberg of Collins Street Value said.

“You see that activity regularly in the markets where people invest onemotion and not fundamentals, but it is extreme in the fossil fuel space.”