3D Investing: adding a third dimension to traditional investing

By Clive Emery, Multi Asset Fund Manager, Invesco Summit Responsible Range

The advent of the modern portfolio theory can be traced back to 1952. Since then, the investment industry has established itself as the purveyor of a broad range of products spanning asset classes, geographies styles and themes. The single fiduciary object is clear: to delivery risk-adjusted returns for clients.

ESG factors are often approached in this two-dimensional landscape of risk and return. There’s large and growing literature from academics seeking a definitive determination as to whether ESG factors contribute to or detract from returns. The evidence to date is inconclusive and may remain so given that a constant or consistent correlation seems unlikely.

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