Investment strategies with an environmental, social, and governance (ESG) dimension are growing in popularity and both, individual and institutional investors, may wonder about the impact a shift to such investments would have on their return expectations.
The outperformance of U.S. compared to international equities seen over the last decade is unlikely to continue over the next. A globally diversified equity allocation is more likely to be rewarded in coming years than an all-U.S. or all-international equity allocation.
Outperforming traditional active equity managers and equity factors have frequent periods of underperformance, some of which are long in duration and large in magnitude. Investors who understand this are more able to maintain the patience they need to reach their goals.