Amid the ongoing debate around ESG principles in investing, John Quealy, the Boston-based CIO of Trillium Asset Management, is a big believer in socially responsible investing.
Mr. Quealy said that focusing heavily on ESG investing does not mean an investor inherently sacrifices returns in order to invest according to one's values.
"Our experience does not support that assertion," he said by email. "For example, our Trillium ESG Global Equity Strategy, launched in 1999, has reported returns that demonstrate relative outperformance over several time-frames, in-line with our investment objective and time horizon."
Indeed, Trillium's ESG global equity strategy has outperformed its benchmark, the MSCI All Country World index for the 3-, 5- and 10-year periods ended Dec. 31, 2022.
Regarding the growing criticism of ESG investing — especially by Republican politicians who oppose applying ESG considerations for their state pension funds and other vehicles, Mr. Quealy simply asserts that ESG investing is just the "latest evolution of using information that has been historically considered 'non-financial' as part of investment decision-making processes."
He cites, for example, that property and casualty insurance, along with commodity market participants, have for many decades used a variety of "purely qualitative data to help inform investment decisions."
The secular movement towards the transparency of real-time, externally sourced data, including societal opinions and values, "ultimately reinforces our underlying investment approach," he added.
Thus, there are some companies that his firm avoids investing in solely over ESG concerns. "Certain industries carry inherent risks through the intended use of their products and services," he said. "Munitions are an example of this exclusion."
As for the overall market, Mr. Quealy said that institutional investors are largely focused on "the positioning and secular outlook of individual companies" rather than on whole subsectors.
After last year's historic volatility and widespread losses, and expectations of slowing economic activity this year, Mr. Quealy does not foresee a sharp rebound in performance this year for "equity market strategies that are core and diversified."
However, within fixed income he is bullish on government and non-taxable bonds.
Trillium has about $4.4 billion in assets under management.
