One Year of Sustainable

March 2023

The performance profile between sustainable investing and a traditional approach, which has a less onerous obligation to include assets that drive positive change, was markedly different during 2022. The main reasons for this were the type of investments held within a sustainable portfolio; namely, the propensity to own faster growing companies which are less profitable in the near term. Sustainable portfolios do not hold energy, tobacco, commodity, and defence companies, which have all outperformed. They do own longer-term bonds, which are more sensitive to interest rates. This can be seen in the differing return profiles of funds held in the sustainable and traditional portfolios for the same asset class. However, we have been pleasantly surprised that the performance of the CAM portfolios has not differed by extreme amounts. Our aim, of providing a similar return profile whilst investing with a sustainable lens, is still achievable over the long-term, although the journey will be different over shorter time periods. Last month we wrote to you about our changing views on the global economic outlook and consequently some of the actions we have taken within portfolios to address this. The commentary is available on our website. However, I will briefly re-cap some of the key points.