| Satisfying a range of appetites This week we brought you a partner feature with Elston Consulting’s Rob Davies on his passion for dividends which lies behind the Elston Smart-Beta UK Dividend Index and his management of the VT Munro Smart-Beta UK fund. Davies believes that market-cap weighted indices were flawed. "When tech became a bubble, the index reflected that bubble – it validated a self-fulfilling prophesy on the way up – and on the way down too. So, I was interested in other ways of weighting an equity index and given the importance of dividends to long-run returns – particularly in the UK – that’s where my focus shifted to," he says.
Bfinance’s Oliver Wade reported this week on institutional investors’ investment appetites, noting that they are rotating towards private debt, infrastructure, and diversifying hedge fund strategies as geopolitical and macroeconomic pressures continue to drive selective risk-taking.
While the first quarter was characterised by abrupt reversals in sentiment due to the reintroduction of tariffs by the US administration, reigniting stagflation fears, there has been a clear shift towards cash allocations, diverging from the traditional rotation into bonds, the firm says.
We brought you an interview with Amy Wu Silverman, Head of Derivatives Strategy, RBC Capital Markets, this week, in which she details her clients’ use of derivatives based on ETFs for hedging in difficult markets. "The most active fixed income ETFs such as HYG and TLT is where we see options are being used because of the ongoing tumultuousness in the rate space," she says. "A lot of people are using HYG puts as a longer-term recession hedge with concern for the possibility of a recession and how that would impact on the underlying companies."
IAM editor, Gill Wadsworth, brought us a piece this week which found that some sustainable investment firms are bucking the trend of the current fall in appetite for all things ESG. Sustainability, impact and environmental, social and governance (ESG) funds haemorrhaged USD8.6 billion of investment in first quarter of 2025, figures from Morningstar reveal, Wadsworth writes. However, not all portfolio managers have seen outflows from their sustainable funds.
EBI Portfolios, an evidence-based investor, launched socially responsible investment (SRI) and impact portfolios in 2024 which have helped the firm attract GBP1 billion in the past year to reach GBP3.9 billion AUM.
Jonathan Griffiths, Investment Product Manager at EBI, acknowledges the ESG backlash, but says it has not extended to his target markets.
"We’ve not seen [anti-ESG sentiment] in our flows. Our adviser clients and their online clients are still very much pro-sustainable investing," he says.
I will be chairing some of the ETF panels at IMPower Fund Forum in June. For a 10 per cent discount to attend, use this link and code: FKN3972ETFX. I hope to see you there.
Beverly Chandler, Managing Editor, Institutional Asset Manager
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