Friday, February 14, 2020

This week's interesting finds

Bond funds are hotter than Tesla
From 1990 through 1999, bond funds and bond ETFs accounted for only 10% of the cumulative $2.37 trillion that flowed into funds, according to the Investment Company Institute. From 2000 through 2009, bond funds made up 26% of the $3.5 trillion in total inflows. Over the 10 years just ended, however, 74% of the total $2.68 trillion that investors added went into bond funds.

Tesla accounted for 40% of volume on online trading app

Housing in Canada
According to The Economist magazine, in the last 50 years, only 2 countries have touched Canada’s current House Price to Income Ratio.  This is what happened to those two countries after:

Japan in the early 90’s and the US in the mid 2000’s never got close to where we are today:

Big Technology Stocks Dominate ESG Funds
Many of the tech companies that are among the most popular stocks in sustainable funds have earned high ratings across multiple elements that analysts consider in evaluating ESG practices. Index provider MSCI Inc. gave Microsoft an “AAA” rating on ESG—the highest possible score, awarded to just 4% of companies in the software and services industry. It cited the company’s strength on privacy and data security, corporate governance, lack of corruption and instability, and clean-tech-innovation capacity.

MSCI gave Facebook and Amazon poor ratings on privacy and data security and on labor management, respectively. The two stocks are held by a number of large sustainable funds anyway since they satisfy other criteria.

Many of the biggest ESG funds try to minimize how much their fund deviates from the broader market by creating a portfolio that, for the most part, looks like today’s technology-dominated S&P 500—just stripped of the companies with the worst ESG practices within each industry. Investors need to look beyond the “feel-good aspect of ESG” and understand what exactly they are buying. 
The fact that definitions of ESG can vary so much from firm to firm has caught the eye of the Securities and Exchange Commission. The agency has sent letters to companies asking advisers how and what they determine are socially responsible investments, The Wall Street Journal reported last year.

Are massive inflows into sustainable funds lifting tech shares?

Photo contest: Winner! 
Tye's concert (festival?) photo is this quarter's winner! You can almost hear the music. We loved the grittiness and the geometric designs captured in the moment.