Carbon clouds on the horizon
Even investors who are confirmed sceptics when it comes to global warming may soon have to take account of companies’ carbon emissions. A report from the Investor Responsibility Research Center Institute and environmental data provider Trucost looks at the theoretical impact of applying a price to carbon emissions for companies in the S&P 500. With the US Congress currently considering the American Clean Energy and Security Act of 2009, this may not remain theoretical much longer.
A key point is that companies are not all equal in how affected they will be. According to the report, carbon costs would amount to less than 1per cent of operating margin for 203 companies, while 71 companies could see earnings fall by 10 per cent or more. Companies in the utilities sector are likely to be hardest hit.
Alpha and beta: a bit too binary
It’s nice when someone points out that a division is not as clearcut as people like to say. In this case, it’s the boundary between alpha and beta.
This particular piece of jargon refers to different sources of investment return. In brief, beta is the return you get from exposure to a market – a tracker fund will get you that – while alpha is the difference between the actual return and the market return that can be attributed to manager skill.
There’s a lot of loose chat about downward pressure on fees, but those who say that it will only affect the mediocre may be right. One fund manager at least is seeing opportunities for nudging fees upwards, on one new product.
Ashmore Group is offering to take distressed assets off your hands in return for fat management and performance fees. The assets in question could be anything in emerging markets that is suffering from illiquidity. Investors, such as banks or pension funds, may not want them on their books currently, as mark to market valuations are unflattering, but nor do they want to sell them in such an unwelcoming environment.