The concept of EST investment

EST refers to ethical, sustainable and thematic investment.

At Holden & Partners we invest for the long term, which means delivering returns that are both reliable and sustainable.

A key part of uncovering investment potential is to identify the trends which are driving global change and anticipate potential opportunities, and risks, that may arise as a result. There is no guarantee that the areas of the market which have enjoyed growth up until now will continue to do so in the future; the trends set today could be the norms of tomorrow.

Trends such as resource scarcity, climate change and demographic shifts will influence the movement of financial markets to an even greater extent in the future. Long term investment involves recognising the changes which are otherwise overlooked by the rest of the market and using this information to shape financial decisions.

We call this unique approach EST – ethical, sustainable and thematic – investment. The concept is simple; investing in a way that acknowledges future threats and opportunities, whilst considering a wider range of issues than past performance to assess potential returns.

This may be achieved through the purchase of:

  • ethical funds, which screen out areas of the market engaged in controversial industries or those exposed to a particular sector-wide risk;
  • sustainable funds, which focus on the ability of companies to ensure the longevity of their products, processes and business models;
  • and thematic funds, which identify global macroeconomic themes and seek out opportunities which are best placed to capitalise upon them.

At the heart of this strategy is the assessment of environmental, social and governance (ESG) factors, which is crucial in providing a realistic indication of the risk and return characteristics associated with a particular investment.

There is increasing pressure on companies and asset managers to heed the social and environmental impact of their activities, and the emphasis placed on ESG can offer a valuable insight into the quality of a company’s management, culture and risk profile.

These factors ultimately help to scrutinise a business prior to investing, mitigating the risk of an event occurring which could affect its financial performance. In this respect, our EST approach is an essential means of creating enduring value for clients – investing with a focus on short term results is neither sensible nor sustainable.

Read more about the potential impact of ESG characteristics [PDF]

The idea that commitment to sustainable principles and good investment performance cannot be combined is an out-dated concept.

Our in-house investment team carefully select funds which we believe will deliver sustainable returns in a manner which will not supersede the financial objectives, or values, of our clients.

Not only can this approach reap significant social and financial rewards, the diversification benefits of analysing opportunities according to their ESG characteristics are stark and can considerably reduce investment risk.