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Dentists Who Invest

Episode 253

Is ESG Investing For Me?

Hosted By: Dr. James Martin

James: 

Fans of the Dennis who Invests podcast. If you feel like there was one particular episode in the back catalogue in the anthology of Dennis who Invests podcast episodes that really, really really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome, welcome to the Dentists who Invest podcast. What’s up everybody. Welcome back to the Dentistsists who invest podcast, a much requested episode on esg investing.

James: 

It’s a bite time we did something about this topic, because a lot of people asked me about it and I’ve got in the house expert. Today. John doyle stood here in front of me, who is an fa. How are you, my friend?

Jon: 

I’m very well. Thank you, I’m very well. Yeah, how are you doing?

James: 

I’m smashing my friend and you know what this. Today I’m here to learn as well, because I know what ESG investing is, but, by my own admission, I haven’t done nearly enough research into it. So, John, maybe it might be nice for you to do just a quick intro about yourself, and then we’ll jump straight into ESG investing what it is, how does it work and how do we take it into consideration when we’re designing our portfolios?

Jon: 

Superb, yep. So, as you said, my name is John Doyle. I’m an independent financial planner. I run a company called Juniper Wealth Management. We’re based up in Lancashire but, as you can probably tell from my voice, I’m a southern lad, grew up in the New Forest, daddy was a dentist, hence working with dentists as well. So 14 years now as a financial advisor, working in not only traditional investing but ethical and socially responsible and ESG environment, and it’s something. Probably about 60 percent of our clients have some form of ESG integration in their portfolios these days.

James: 

Gotcha, and on that note, ESG. Let’s break it down like you’re explaining it to a five-year-old. Bear in mind, you’re talking to us dentists who have no financial background whatsoever. Esg, what is it? Let’s start from the bottom up.

Jon: 

Okay, well, probably best to start with a bit of history, Okay, because there’s a lot of terms and I realized I just threw a load of terms in even in my introduction, right?

Jon: 

So if we go like all the way back to the 1960s with investing, people’s main intention was just to make money, called this traditional investing, okay, but then you, you had a few kind of uh, charities or, uh, very, very ultra high net worth investors who wanted to not invest in certain things, probably mostly for religious reasons, and we had the birth of ethical investing or socially responsible investing. And then, as you flash forward to about 2005, the United Nations came up with this governance policy called ESG, and that’s where this kind of middle ground starts to come in, and as advisors, often we conflate all the different words together, but they do mean different things. So ESG is environmental, social and governance, and it’s a way of looking at a company and giving it a score or rating based upon its impact on the environment, its impact on society and its governance as a company. So how well it’s run.

James: 

Got you Interesting stuff, okay, cool. So how does that conversation typically go? When you’re consulting a new client and they say to you okay, john, what I want to do is I want to have some sort of ESG consideration in my portfolio, what would you, in turn, say to them next? Would you say, okay, well, I would advise you to go partly ESG, partly traditional, because what I would assume is that the returns are better if you have a diversified portfolio across more traditional markets, rather than ring fencing yourself into one particular subsection. Would that be the case, or how does that typically look? Or would you say full steam ahead, esg where it’s at these days, that’s where you’re going to get the best returns.

Jon: 

So, in terms of, do they return better, because that’s probably the easiest one to answer. What I’ve tended to find is they um, they’re kind of zig and zag, so when, when one’s doing outperforming, the other lag a bit and then you get this crossover. Mostly because you um with esg, you’ll tend to filter out sectors like oil and gas or, um, you know, tobaccos, things like that. They’ll tend to not be in there. And if you look at the last, you know sort of 2020, esg portfolios absolutely flying because it’s filled with tech stocks, it’s filled with Tesla, it’s filled with, you know, google and all these big, big companies. But then over maybe the last 12 months, as oil and gas prices well, we all know what’s happened with those You’ve seen the sort of traditional investments claw back and maybe overtake, and so I find it’s a bit of give and take, which is why my question comes more onto what values are we trying to achieve with ESG?

Jon: 

Okay, so our investments is it’s about aligning values with your money, because for some people it’s kind of it’s really, really important. Maybe there’s like serious ethical considerations they’ve got. So they’re really far on the spectrum. You know they’re living a vegan life completely at one, harmonious and hippie and tree-hugging and everything. For others, it’s actually I just want my money to do some good. I just want to feel like I’m not making the world worse than when I joined it. For others, just absolutely no real consideration. We just continue with traditional. So we have a big conversation around values and what it is we’re trying to achieve with investing, maybe with a socially responsible or an ESG hat on.

James: 

Well, yeah, that’s completely reasonable, because I suppose people might come to you and they say they’ve heard of ESG and they say, oh well, that sounds good. I want to partake in that, but actually what ESG means to one person is totally different to the next person. So I’m really yeah, I’m really interested actually. So what, how does that conversation look then? So you’d ask them specifically about their religious beliefs. You know, how do you quantify how ESG someone is? You know?

Jon: 

We have two approaches to this. We’ve got one that’s sort of stipulated from a regulatory point of view, where we give our clients yet another questionnaire to fill in and they tick all the boxes, and that that can be useful because you can see, are they’re really concerned about animal testing or they’re concerned about, um, you know, alcohol, um. But then then you have this, this wider conversation. I actually um, I’ve got a whole slide deck that I take clients through.

Jon: 

A big part of it’s about educating them why we invest the way we do, why we do the things we do, and I’ve got what I call a Venn diagram on steroids of where all these different areas overlap with each other, because the surprising thing for a lot of people is that an ESG portfolio has most of the same investments as a traditional, and it’s just the fringes of the companies that you’re kind of getting rid of, the bad actors, as it were is what you’re trying to achieve anyway, and so you can talk to people about. Well, is there somewhere along this spectrum that you feel that you’re landing on? Are there specific things that you’re really against, or is it just a general, uh, a general approach that you’re trying to take here? Sometimes you’ll get someone who just turns around and says in one conversation they were like I don’t want to invest in boohoo, okay you’re like okay, um it’s actually a practice manager at dental practice, this one uh, I don’t want to invest in Boohoo.

Jon: 

So then you go and have a conversation, you go. Well, the amount of money we’re investing, the cost of implementing a portfolio that only excludes Boohoo, is not going to provide you any value from an investment perspective.

James: 

I hear you, yeah, and presumably that’s boo-hoo because of fast fashion.

Jon: 

Yeah, and the whole controversy during lockdown of paying people £3 an hour in Leicester and all this kind of stuff. You know, just yeah, not a great company. But you know we use index funds a lot and we’ll talk about indexing and ESG, I’m sure later. But I’ll then approach it. And with that conversation is, you know, we’ve got a portfolio with, say, five or 6,000 investments in it and one of those is Boohoo and you’ve got a hundred grand invested. What are we going to have invested in Boohoo? A quid, two quid? How comfortable are you with that If we know that generally we’re taking an approach where we’ve got good companies for the environment, good companies socially, good companies on the governance side, if one or two slip through.

James: 

Got you, so it’s a conversation effectively Very definitely.

Jon: 

Yeah, and different people have different abilities to bespoke it. You know one of we do some work with charities. You know we’ve got a multi-million pound portfolio for a charity. We’re able to go very specific for that charity. You know on what? Because we can. We can individually screen things out because of the size of the portfolio. And then they’ve got the social risk of you know that charity invested in bad lending practices, not very good, because the charity is kind of trying to help people out of poverty. So it gets very important on those things.

James: 

Yeah, I can imagine it’s a PR thing, absolutely so who’s on the naughty list when it comes to esg investing? Who are the the no-nos, the people that are blacklisted and they’ll never ever be in an esg portfolio?

Jon: 

um, that’s a really, really interesting question because, um, there’s some surprising companies who are in ESG portfolios.

James: 

Okay, so you might think that an oil company would never hit an ESG portfolio. Yeah, that would be a reasonable assumption. That’s actually who I was thinking of when I asked that question.

Jon: 

So Shell have a double A rating for ESG.

Jon: 

yeah, oh wow, yeah, it is the most surprising one. There’s a great tool and um, I’ll get, I’ll give, send you a link so you can put it in your show notes. But, um, we use msci and msci a big index provider, we use their methodology for our esg and socially responsible portfolios and they’ve got a tool you can go and you can look up any company that’s listed in the world and look at their, their ratings and what’s going. You know why they’re rated the way they are. Shell have got a really good climate impact target and they’re on target to hit that two and a half degree increase on climate change decarbonize. And then they’ve also got really good governance, really good corporate behavior.

James: 

So Shell actually ended up as AA, higher rated than Tesla, really Okay, wow. So it’s not as intuitive as you might think, or it’s definitely not like these people are bad. This industry is bad, this industry is good, something like that. And just to clarify AA, I’m guessing like the best rating is like AAA or something like that. And just to clarify double a, I’m guessing like the best rating is like triple a or something like that, so they’re one off the top. And then what is the really? What are the ratings going down to? Like c, c, okay, all right, so it’s uh, it’s, it’s okay. Wasn’t expecting that from shell, but there you go. And well, I have read a little bit about them that they they do plant like x number of trees for every well that they find, or something like that.

Jon: 

It’s those sorts of things, you know carbon capture, carbon offset, investment in renewables. They’re going to be making strides towards hitting climate targets.

James: 

Got you. Okay, let’s look at the cold hard numbers, and we touched upon this a little bit earlier. Look at the cold hard numbers and we we touched upon this a little bit earlier. Is that now? You said that obviously, tech, tech in like what 2019, 2020, was flipping, booming, like the nasdaq and what have you? Yeah, nowadays, over the last year or two less so, but then again, in investing terms, those are tiny time frames, like really small time frames. Okay, so, overall, is the data there yet to say that esg can actually outperform traditional investing or just buying the stock market, buying the market?

Jon: 

uh, no. Is the honest answer that there isn’t enough data yet for um to show that esg is like a factor in the same way like small cap or value investing or growth investing would be a factor that you could look at and say, yeah, academically speaking, it will produce outperformance. There isn’t that data there yet.

James: 

Yeah, I thought you might say that because it’s only really I’m guessing. A lot of these funds have only really been around for maybe I don’t know under a decade um, yeah.

Jon: 

So if you think sort of 2005, the un came up with the phrase esg. Yeah, it takes a few years for it to start filtering through and then, yeah you, most of these funds. This fund management industry is classic for this. They launch them when it’s popular. So if you look at where the money’s come from, it’s like mostly in the last two, three years. So there just isn’t that sort of data. Probably the best one to look at if you’re looking for long-term data is the FTSE for good, which was sort of launched in the early 90s. I think that was more ethical than ESG, but there’s obviously a big overlap, yeah, so the FTSE for good could be quite an interesting one to look at.

James: 

That’s interesting and FTSE for good, I’m guessing. I’m reading between the lines and I’m going to say that that’s a tracker fund.

Jon: 

They have a range of tracker funds with the FTSE for good yeah.

James: 

Because obviously that would mean that it’s not active, which would mean the fees are less, which is you presume most ESG ones are active, right? Well, I’m guessing that they are.

Jon: 

As with funds in general, most funds out there are active, but there are an increasing number of ESG and SRI socially responsible index funds out there. So the portfolios we run at Juniper All index funds, both the socially responsible, ESG and the traditional.

James: 

Okay, so I’ve just picked up on you using another term there socially responsible versus ESG.

Jon: 

And I’m going to guess there’s certain things I just don’t want to invest in Now. Mostly with those it’s the kind of the popular sins. You know you’ve got tobacco, you’ve got oil and gas, you’ve got guns, you know those sorts of things would get screened out. Alcohol is generally thrown in there as well, so things that are kind of seen as the most common, uh, things people want to be out of, and then you get a socially responsible portfolio.

James: 

That’s interesting. So when you obviously we can’t go into specifics and tailored advice in this podcast, but when someone comes to you as an individual, as a client for your, for your, your financial advisor, your company, would you ever say to them listen? Would you ever actively say listen. I think that you should at least have some of your portfolio in the ESG, in the ESG-based one, because of X, y and Z. Or is it more a client-led discussion that you let them come to you and ask actually, this is what I’d prefer to have, or would you ever guide them into the, into investing in those things, from the point of view that you genuinely think that they can maybe get better returns, or part of their portfolio should be this, be in this, for whatever reason? How does that look?

Jon: 

uh, so my, my default is to go one foot in both camps. Just you know, let’s split 50 50 between a socially responsible and a traditional approach oh really.

Jon: 

So that’s actually your default for a new client yeah, yeah, because when I, when I speak to most people, they go well, I kind of think it’d be a good idea. I don’t want to lose out and and you know, they’re kind of middling about it anyway. Yeah, if you’re kind of undecided and you go, well, I’d like a bit, but I don’t want it all. Then 50-50 seems like a reasonable approach to take. It’s actually worked really well over the last couple of years because it’s evened out the outperformance and underperformance of the two portfolios.

Jon: 

You’ll find a lot of our advisors will argue about this and I’m sure they’ll. Someone tell me I’m I’m wrong, but, um, you know, what we then tend to do is, based on the conversations, is we’ll wait it one way or the other. So I’ve had some clients who turn around and say you know, I don’t want any of that, it’s all hippie nonsense, all traditional. And then then others who will go yeah, it’s really important to me and we’ll go full, all socially responsible. Um, but yeah, the one foot in each camp kind of yeah, it seems to be a quite, quite comfortable. It’s the compromise approach, I guess.

James: 

That’s cool, that’s interesting, and I know we said the data wasn’t there just at the start to say what the returns are going to be on these long term. But are you able to pluck some numbers off the top of your head in terms of average returns? Say for that the FTSE one that you were talking about earlier. How much is it appreciated on average every year?

Jon: 

I get that the time frame is not long enough for us to say what that might be going forward, but let’s compare it to the s&p, which is what like 9.1 percent total returns if you include dividends what I’ll do really curious yeah, if you give me just two sets, I’m just gonna pull those, yeah, yeah what I’ll do is I’ll pull up the portfolios that we use and we’ll just look at the 100 equity, because if we’re comparing to the s&p, then 100 equity is where we’d want to be, uh looking yeah, totally.

James: 

That would be really interesting to know. But, just as I say, just to reiterate what we said earlier, anybody, anybody who’s listened to this it’s not the only metric to make a flipping investment decision about what it’s done. And I actually see this all the time, that people see returns as the only metric, but really there’s a lot more to it. But I’m just genuinely curious, just straight up, how that compares or how that looks.

Jon: 

So these portfolios have the same asset allocation as in global asset allocation and the same equity allocation 100% equity but if we’re America, it’s the same percentages allocated to the US. So if we look at five years US. So if we look at five years on the socially responsible, the return has been 10.28% per year after investment costs but before any advisory costs, and then for the traditional it’s been 7.07 for that same period and largely, like I said, largely that’s down to the responsible having a higher weighting to tech, which over the last five years has done particularly well versus sort of more traditional weightings to oil and gas and other things. So the weighting has been favorable over this last few years. But five years is not enough to say this is a repeatable pattern going forward.

James: 

Yeah, totally, and is there any data on that over longer time frames, maybe 10 years, something like that?

Jon: 

um I don’t have any for the portfolios that we run, because those indexes that are within it and the, the funds haven’t been around that long, cool yeah, but I probably, if we uh, you fill for a moment I can, I can jump into absolutely, yeah, absolutely so.

James: 

Yeah, I ESG investing. I’m here to learn as well on this particular one, and it’s one that gets requested on the group and absolute ton, and I feel like, for me, what the whole point of this podcast is part of it is to actually delve down into the nitty gritty, because I feel like there’s going to be two camps out there. It’s going to be the people who see it as something hugely important. There is going to be the people who see it as something hugely important. However, they’re also a little unsure because they don’t they don’t know. Next, is this going to compromise their actual returns to some degree, which you know. This is why we’re delving into the returns here at this point, but we’re also quick to caveat everything and say listen, the reality is, the time frames are not long enough to really draw any serious conclusions. So, whilst, yes, let’s look at it straight up from the point of view of people who want their portfolios to grow at the greatest rate, maybe it does make sense Okay, maybe it does make sense to have some ESG, but, at the same time, would you want to put all of your wealth into it? At this stage, probably not, but it maybe actually makes sense, even from the point of view of someone who just wants to accelerate growth in their portfolio and actually get better returns. Real quick guys.

James: 

I’ve put together a special report for dentists, entitled the seven costly and potentially disastrous mistakes that dentists make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdentistoinvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them. I’m really looking forward to hearing your thoughts.

Jon: 

I think I would expect it to pick up similar returns to the index as a whole, because you know when you’re talking about how many companies are going to be held within an index compared to those that would be filtered out. On ESG. You’re not going to be screening out loads and loads of the market, but what you’ll have is pockets of performance where certain sectors will be outperforming or lagging, and that’s where you’ll get your difference. But over time that will generally even out cool and more and more companies are starting to produce the information that ESG rating companies want and also produce the targets, so more and more companies will be getting pulled into the ESG rating system. I’m just looking through. Oh okay, I haven’t got anything long enough that I can find quickly.

James: 

It’s all right, maybe, you know, maybe if, even if we were just straight up be able to see the returns of that one that you mentioned earlier, the fitzy uh, one that I can’t remember exactly for good fitzy for good, that’s an interesting one yeah, maybe that might be the best place to go. And then what we do is we just the average total returns, I suppose on that just it would be interesting. But, uh, I mean, yeah, yeah, we’ll see what we find on that one. Okay, let’s see what we find.

Jon: 

What we’ll do is just cut this bit out yeah, sure, I think I think the um, well, we’re cutting this, but then it’s fine. I can just take a moment just to point something is there anything else?

James: 

obviously we’re going to cut all this part out yeah, is there anything else really that’s, do you think that it’s worth me asking you about?

Jon: 

yeah, I think so, like um, I think one of the things that’s a really interesting discussion at the moment is what is ESG actually doing to improve the companies that are being invested in? Okay, so you?

James: 

know, is.

Jon: 

is it enough to invest in? Is investing in an ESG actually making these companies better?

James: 

Yeah, what are those figures, now that you’ve filled them up, john?

Jon: 

Okay, so this is the FTSE for good. It’s a UK one, so you’re probably best comparing it to, say, the FTSE 100 over the same period. But from October 2003 until now it’s done 161% as a return, if I just quickly add in the um index yeah, totally get some cold hard figures on that one for comparison yeah, versus the footsie 100 over that same period.

Jon: 

Say, yeah, that footsie 100 over that period has done 258% compared to 161% for the FTSE. Okay, so slight compromise there. Yeah, I’d say, particularly when we’re looking at UK, it’s going to be around oil and gas and British American tobacco, british aerospace we’re losing out on those companies which are quite big constituents of the FTSE. Yeah, got you. Yeah, so that’s where the footsie for good is an esg plus ethical screening fund and it will lose out during those periods. But there’s been periods of outperformance during that time yeah, yeah, but there you go.

James: 

I mean, is what you’re saying there is? Basically, is it a fair comparison on when you’re talking about that specific index? Because most of the 50 is flipping legacy companies from, however long ago, mining companies and all these ones that tend to not be looked upon so favorably by esg investors and hence don’t make the cut when it comes to that particular fund. So it’s an interesting one. You know, it’s one of those things. You know, it’s really hard to make science on something like this because there’s so many variables, you know, and yeah, just things to consider. So, obviously, when we invest in these ESG funds and we feel like we’re doing good for the environment and we feel like we’re supporting these companies that are ethical, they’re here to help, here to make the world a better place but would you say that it’s actually fair to say that, when we purchase these, that our money is going directly to these companies and it’s being put to good use?

Jon: 

well, at the moment there’s a really big debate about this. You know, because the esg has exploded over the last couple of years. There’s big um debates around how much of its greenwashing. You know there’s a lot of investment management funds that have just renamed their fund and put esg in it because most of the funds within it were okay for ESG purposes, but the actual content of the fund hasn’t changed and they’re not actually doing anything from an engagement perspective either. So I think this is where the values thing really comes into it.

Jon: 

When we’re talking with a client about why are we wanting to invest this way? Because if we’re wanting to avoid things because it impacts on our ethics, then absolutely we 100% want to avoid these things. But if we’re trying to actively make companies better, I think there’s a really strong argument to say that index investing in the general market is as good as a pure ESG approach. Because when an index investor the biggest index investing company in the UK is legal in general, they’re the biggest shareholder on the FTSE. When they’re buying these shares on behalf of their investors, they’re buying them knowing they’re not going to sell them these shares on behalf of their investors. They’re buying them knowing they’re not going to sell them. So what do they do when they’re on their earnings call with Shell and the shareholder? You know AGMs Well, they vote with a long-term mind. They vote with an ESG mind.

Jon: 

It was index investing companies like Vanguard, like Legal General, like iShares, who pushed for decarbonization within companies like Vanguard, like Legal General, like iShares, who pushed for decarbonization within companies like Shell and pushed them for this climate action.

Jon: 

What are you actually going to be doing about it? Because we’re still going to be holding you in 50 years time for our pension investors. So I think there’s a really good argument to make that investing in a general index portfolio, if you’ve got the right um index providers, it is as strong and in um is going to have as strong an impact as a, as an esg portfolio, because they’re still going to be driving that change in those companies. But you will have investments that may be conflict with your ethics and that’s where we have this. We don’t really do much pure ESG. We do the socially responsible where we’re saying we’ll move all these ones that conflict with our ethics out as well as have the ESG in there or we’ll go traditional. We do have a couple of clients who’ve chosen to go down the ESG route, but mostly it’s the socially responsible or traditional or a mixture of those two.

James: 

Awesome, Okay, cool, so really, really, really nice roundup or summary of ESG investing there. Just to put a cap on everything that we said today. Short and sweet, powerful and punchy tidbits of advice for anybody who wants to have more exposure to ESG in their portfolio. What can they do? How can they go about it? What are the things that they can do to investigate these funds, at least to a cursory level, so that it’s something actionable that people can implement?

Jon: 

So if you want to know whether the funds you’re investing in have what their ESG ratings are like, there’s three tools provided by MSCI that we use that are free, okay. So again, I’ll send you the links and we’ll pop those in the show notes. One of those is to look at companies. One of those is to look at indexes notes. One of those is to look at companies. One of those is to look at indexes, and one of those is to look at funds, and you can then drill down into your funds and see what the pros and cons are. So if it’s something you really care about, you can look at them and see what’s happening With all of this stuff. Just have your own philosophy about how you want to invest, do your research and then stick to it.

Jon: 

Don’t go into ESG because it’s the latest fad and the newspapers are telling you it’s doing great, because the more we follow the wind, the more we’re going to get blown over. Okay, we want our philosophy, want to stick to it. Know why we buy things and then you’ll know when it’s time to to get out of them. So I that’s why I’d go values over over doing it for profit 100 and the media.

James: 

They don’t do investors any favors, really, because it’s it’s made out like it’s this supposed to be, this flipping, frantic, high energy thing. Where you’re, you’re jumping into this fund, you’re jumping out of this one because the world has changed and now we need to do this, or this is a current trend, like you know. When you see on uh I’m not going to name any names, but certain financial literature institutions that I don’t subscribe to my mailbox I don’t even know why, sometimes because I don’t read the stuff that they send me it’ll say. It’ll say things like uh is now the time to invest in uranium and stuff like this.

James: 

It’s like, that’s just so stupid you know what I mean as if now is the time to go ahead and jump into it, whereas I mean for me, even if you, even if you did buy some uranium right and you made more returns on that than you might have expected you would have done otherwise. The thing about it is you have to actually think to yourself at what point am I going to take money out of this to actually realize this gain? Because chances are it’s going to rebalance, or it’s the rest of the market’s going to catch up, due to the law of averages that tends to do what happens to the mean yeah, reverts the mean. There you go, right. And then, for me, right if you’re, if you’re doing that and you’re jumping in because you’re getting swept away in the wind, just as what you said earlier, or you’re getting caught up in this tidal wave of frenzy for this particular asset, right, what? What’s the end goal? What is the end goal?

James: 

And, realistically, if you’re not going to do that, it might have been easier just to buy, use the tried and tested techniques to buy the market or buy, buy the average, because realistically for you that would be the best thing to do in the long run because you don’t have the time to have these more short-term jumping in and out of the market strategies and all I, all I would, and I’m not. This is not me saying that, you know, don’t invest in the esg and don’t do all of these things. What I am saying just it kind of aligns with what you’re saying effectively is that if you’re going to do it, stick to your guns, find a fund that works for you, okay, and then have it as a portion of your portfolio, and then what that means is that you can consistently invest in it and see some returns that are more aligned with your beliefs, rather than jump just as we were saying earlier, this frantic buying frenzy you’re getting swept away.

Jon: 

The values thing becomes really important. Because if, if you’re in that footsie for good and you’ve lagged the market but you know you’ve done it without conflicting with your values, yeah, would you have wanted those returns in the first place? If it’s from the things that you can’t stand, yeah. So you have to be happy with the returns you get because it’s stuck to your values. If it’s not your values, then don’t go down that road because you’re going to be restricting your investment criteria needlessly. So that’s why we have this kind of half and half. Some people, they really value it. Some people they don’t. Resg, socially responsible stuff very, very broad. It’s got 8,000 holdings compared to 10,000 for the wider market ones. So it’s not like we’re completely narrowed at the focus of the portfolios.

James: 

Got you Really interesting that that’s a conversation that you have with every single client. I had no idea that things had developed to that level might just be me mate oh, that’s cool, that’s cool.

James: 

Yeah, here’s the thing. Even if it is just you and your practice, it’s still really cool. You know what I mean. I I had no idea, certainly, that it was that far along, but, yeah, food for thought, john. Thank you so much for your time today. If anything that you have said has interested anybody in the podcast who has been listening to the podcast, where can they find out more about you?

Jon: 

My Twitter and Instagram is just Juniper underscore, john. You can find me on LinkedIn or our website is juniperwealthcouk.

James: 

Top stuff, John. Thank you so much for your time today. Interesting episode on ESG investing. We’ll catch up really soon, John. Thank you so much for your time today. Interesting episode on ESG investing. We’ll catch up really soon. Yeah, great to speak and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search Dentists who Invest on Facebook and hit join to become part of a community of thousands of other dentists interested in improving their finances, wellbeing and investing knowledge. Looking forward to seeing you on there.

James: 

Fans of the Dennis who Invests podcast. If you feel like there was one particular episode in the back catalogue in the anthology of Dennis who Invests podcast episodes that really, really really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome, welcome to the Dentists who Invest podcast. What’s up everybody. Welcome back to the Dentistsists who invest podcast, a much requested episode on esg investing.

James: 

It’s a bite time we did something about this topic, because a lot of people asked me about it and I’ve got in the house expert. Today. John doyle stood here in front of me, who is an fa. How are you, my friend?

Jon: 

I’m very well. Thank you, I’m very well. Yeah, how are you doing?

James: 

I’m smashing my friend and you know what this. Today I’m here to learn as well, because I know what ESG investing is, but, by my own admission, I haven’t done nearly enough research into it. So, John, maybe it might be nice for you to do just a quick intro about yourself, and then we’ll jump straight into ESG investing what it is, how does it work and how do we take it into consideration when we’re designing our portfolios?

Jon: 

Superb, yep. So, as you said, my name is John Doyle. I’m an independent financial planner. I run a company called Juniper Wealth Management. We’re based up in Lancashire but, as you can probably tell from my voice, I’m a southern lad, grew up in the New Forest, daddy was a dentist, hence working with dentists as well. So 14 years now as a financial advisor, working in not only traditional investing but ethical and socially responsible and ESG environment, and it’s something. Probably about 60 percent of our clients have some form of ESG integration in their portfolios these days.

James: 

Gotcha, and on that note, ESG. Let’s break it down like you’re explaining it to a five-year-old. Bear in mind, you’re talking to us dentists who have no financial background whatsoever. Esg, what is it? Let’s start from the bottom up.

Jon: 

Okay, well, probably best to start with a bit of history, Okay, because there’s a lot of terms and I realized I just threw a load of terms in even in my introduction, right?

Jon: 

So if we go like all the way back to the 1960s with investing, people’s main intention was just to make money, called this traditional investing, okay, but then you, you had a few kind of uh, charities or, uh, very, very ultra high net worth investors who wanted to not invest in certain things, probably mostly for religious reasons, and we had the birth of ethical investing or socially responsible investing. And then, as you flash forward to about 2005, the United Nations came up with this governance policy called ESG, and that’s where this kind of middle ground starts to come in, and as advisors, often we conflate all the different words together, but they do mean different things. So ESG is environmental, social and governance, and it’s a way of looking at a company and giving it a score or rating based upon its impact on the environment, its impact on society and its governance as a company. So how well it’s run.

James: 

Got you Interesting stuff, okay, cool. So how does that conversation typically go? When you’re consulting a new client and they say to you okay, john, what I want to do is I want to have some sort of ESG consideration in my portfolio, what would you, in turn, say to them next? Would you say, okay, well, I would advise you to go partly ESG, partly traditional, because what I would assume is that the returns are better if you have a diversified portfolio across more traditional markets, rather than ring fencing yourself into one particular subsection. Would that be the case, or how does that typically look? Or would you say full steam ahead, esg where it’s at these days, that’s where you’re going to get the best returns.

Jon: 

So, in terms of, do they return better, because that’s probably the easiest one to answer. What I’ve tended to find is they um, they’re kind of zig and zag, so when, when one’s doing outperforming, the other lag a bit and then you get this crossover. Mostly because you um with esg, you’ll tend to filter out sectors like oil and gas or, um, you know, tobaccos, things like that. They’ll tend to not be in there. And if you look at the last, you know sort of 2020, esg portfolios absolutely flying because it’s filled with tech stocks, it’s filled with Tesla, it’s filled with, you know, google and all these big, big companies. But then over maybe the last 12 months, as oil and gas prices well, we all know what’s happened with those You’ve seen the sort of traditional investments claw back and maybe overtake, and so I find it’s a bit of give and take, which is why my question comes more onto what values are we trying to achieve with ESG?

Jon: 

Okay, so our investments is it’s about aligning values with your money, because for some people it’s kind of it’s really, really important. Maybe there’s like serious ethical considerations they’ve got. So they’re really far on the spectrum. You know they’re living a vegan life completely at one, harmonious and hippie and tree-hugging and everything. For others, it’s actually I just want my money to do some good. I just want to feel like I’m not making the world worse than when I joined it. For others, just absolutely no real consideration. We just continue with traditional. So we have a big conversation around values and what it is we’re trying to achieve with investing, maybe with a socially responsible or an ESG hat on.

James: 

Well, yeah, that’s completely reasonable, because I suppose people might come to you and they say they’ve heard of ESG and they say, oh well, that sounds good. I want to partake in that, but actually what ESG means to one person is totally different to the next person. So I’m really yeah, I’m really interested actually. So what, how does that conversation look then? So you’d ask them specifically about their religious beliefs. You know, how do you quantify how ESG someone is? You know?

Jon: 

We have two approaches to this. We’ve got one that’s sort of stipulated from a regulatory point of view, where we give our clients yet another questionnaire to fill in and they tick all the boxes, and that that can be useful because you can see, are they’re really concerned about animal testing or they’re concerned about, um, you know, alcohol, um. But then then you have this, this wider conversation. I actually um, I’ve got a whole slide deck that I take clients through.

Jon: 

A big part of it’s about educating them why we invest the way we do, why we do the things we do, and I’ve got what I call a Venn diagram on steroids of where all these different areas overlap with each other, because the surprising thing for a lot of people is that an ESG portfolio has most of the same investments as a traditional, and it’s just the fringes of the companies that you’re kind of getting rid of, the bad actors, as it were is what you’re trying to achieve anyway, and so you can talk to people about. Well, is there somewhere along this spectrum that you feel that you’re landing on? Are there specific things that you’re really against, or is it just a general, uh, a general approach that you’re trying to take here? Sometimes you’ll get someone who just turns around and says in one conversation they were like I don’t want to invest in boohoo, okay you’re like okay, um it’s actually a practice manager at dental practice, this one uh, I don’t want to invest in Boohoo.

Jon: 

So then you go and have a conversation, you go. Well, the amount of money we’re investing, the cost of implementing a portfolio that only excludes Boohoo, is not going to provide you any value from an investment perspective.

James: 

I hear you, yeah, and presumably that’s boo-hoo because of fast fashion.

Jon: 

Yeah, and the whole controversy during lockdown of paying people £3 an hour in Leicester and all this kind of stuff. You know, just yeah, not a great company. But you know we use index funds a lot and we’ll talk about indexing and ESG, I’m sure later. But I’ll then approach it. And with that conversation is, you know, we’ve got a portfolio with, say, five or 6,000 investments in it and one of those is Boohoo and you’ve got a hundred grand invested. What are we going to have invested in Boohoo? A quid, two quid? How comfortable are you with that If we know that generally we’re taking an approach where we’ve got good companies for the environment, good companies socially, good companies on the governance side, if one or two slip through.

James: 

Got you, so it’s a conversation effectively Very definitely.

Jon: 

Yeah, and different people have different abilities to bespoke it. You know one of we do some work with charities. You know we’ve got a multi-million pound portfolio for a charity. We’re able to go very specific for that charity. You know on what? Because we can. We can individually screen things out because of the size of the portfolio. And then they’ve got the social risk of you know that charity invested in bad lending practices, not very good, because the charity is kind of trying to help people out of poverty. So it gets very important on those things.

James: 

Yeah, I can imagine it’s a PR thing, absolutely so who’s on the naughty list when it comes to esg investing? Who are the the no-nos, the people that are blacklisted and they’ll never ever be in an esg portfolio?

Jon: 

um, that’s a really, really interesting question because, um, there’s some surprising companies who are in ESG portfolios.

James: 

Okay, so you might think that an oil company would never hit an ESG portfolio. Yeah, that would be a reasonable assumption. That’s actually who I was thinking of when I asked that question.

Jon: 

So Shell have a double A rating for ESG.

Jon: 

yeah, oh wow, yeah, it is the most surprising one. There’s a great tool and um, I’ll get, I’ll give, send you a link so you can put it in your show notes. But, um, we use msci and msci a big index provider, we use their methodology for our esg and socially responsible portfolios and they’ve got a tool you can go and you can look up any company that’s listed in the world and look at their, their ratings and what’s going. You know why they’re rated the way they are. Shell have got a really good climate impact target and they’re on target to hit that two and a half degree increase on climate change decarbonize. And then they’ve also got really good governance, really good corporate behavior.

James: 

So Shell actually ended up as AA, higher rated than Tesla, really Okay, wow. So it’s not as intuitive as you might think, or it’s definitely not like these people are bad. This industry is bad, this industry is good, something like that. And just to clarify AA, I’m guessing like the best rating is like AAA or something like that. And just to clarify double a, I’m guessing like the best rating is like triple a or something like that, so they’re one off the top. And then what is the really? What are the ratings going down to? Like c, c, okay, all right, so it’s uh, it’s, it’s okay. Wasn’t expecting that from shell, but there you go. And well, I have read a little bit about them that they they do plant like x number of trees for every well that they find, or something like that.

Jon: 

It’s those sorts of things, you know carbon capture, carbon offset, investment in renewables. They’re going to be making strides towards hitting climate targets.

James: 

Got you. Okay, let’s look at the cold hard numbers, and we touched upon this a little bit earlier. Look at the cold hard numbers and we we touched upon this a little bit earlier. Is that now? You said that obviously, tech, tech in like what 2019, 2020, was flipping, booming, like the nasdaq and what have you? Yeah, nowadays, over the last year or two less so, but then again, in investing terms, those are tiny time frames, like really small time frames. Okay, so, overall, is the data there yet to say that esg can actually outperform traditional investing or just buying the stock market, buying the market?

Jon: 

uh, no. Is the honest answer that there isn’t enough data yet for um to show that esg is like a factor in the same way like small cap or value investing or growth investing would be a factor that you could look at and say, yeah, academically speaking, it will produce outperformance. There isn’t that data there yet.

James: 

Yeah, I thought you might say that because it’s only really I’m guessing. A lot of these funds have only really been around for maybe I don’t know under a decade um, yeah.

Jon: 

So if you think sort of 2005, the un came up with the phrase esg. Yeah, it takes a few years for it to start filtering through and then, yeah you, most of these funds. This fund management industry is classic for this. They launch them when it’s popular. So if you look at where the money’s come from, it’s like mostly in the last two, three years. So there just isn’t that sort of data. Probably the best one to look at if you’re looking for long-term data is the FTSE for good, which was sort of launched in the early 90s. I think that was more ethical than ESG, but there’s obviously a big overlap, yeah, so the FTSE for good could be quite an interesting one to look at.

James: 

That’s interesting and FTSE for good, I’m guessing. I’m reading between the lines and I’m going to say that that’s a tracker fund.

Jon: 

They have a range of tracker funds with the FTSE for good yeah.

James: 

Because obviously that would mean that it’s not active, which would mean the fees are less, which is you presume most ESG ones are active, right? Well, I’m guessing that they are.

Jon: 

As with funds in general, most funds out there are active, but there are an increasing number of ESG and SRI socially responsible index funds out there. So the portfolios we run at Juniper All index funds, both the socially responsible, ESG and the traditional.

James: 

Okay, so I’ve just picked up on you using another term there socially responsible versus ESG.

Jon: 

And I’m going to guess there’s certain things I just don’t want to invest in Now. Mostly with those it’s the kind of the popular sins. You know you’ve got tobacco, you’ve got oil and gas, you’ve got guns, you know those sorts of things would get screened out. Alcohol is generally thrown in there as well, so things that are kind of seen as the most common, uh, things people want to be out of, and then you get a socially responsible portfolio.

James: 

That’s interesting. So when you obviously we can’t go into specifics and tailored advice in this podcast, but when someone comes to you as an individual, as a client for your, for your, your financial advisor, your company, would you ever say to them listen? Would you ever actively say listen. I think that you should at least have some of your portfolio in the ESG, in the ESG-based one, because of X, y and Z. Or is it more a client-led discussion that you let them come to you and ask actually, this is what I’d prefer to have, or would you ever guide them into the, into investing in those things, from the point of view that you genuinely think that they can maybe get better returns, or part of their portfolio should be this, be in this, for whatever reason? How does that look?

Jon: 

uh, so my, my default is to go one foot in both camps. Just you know, let’s split 50 50 between a socially responsible and a traditional approach oh really.

Jon: 

So that’s actually your default for a new client yeah, yeah, because when I, when I speak to most people, they go well, I kind of think it’d be a good idea. I don’t want to lose out and and you know, they’re kind of middling about it anyway. Yeah, if you’re kind of undecided and you go, well, I’d like a bit, but I don’t want it all. Then 50-50 seems like a reasonable approach to take. It’s actually worked really well over the last couple of years because it’s evened out the outperformance and underperformance of the two portfolios.

Jon: 

You’ll find a lot of our advisors will argue about this and I’m sure they’ll. Someone tell me I’m I’m wrong, but, um, you know, what we then tend to do is, based on the conversations, is we’ll wait it one way or the other. So I’ve had some clients who turn around and say you know, I don’t want any of that, it’s all hippie nonsense, all traditional. And then then others who will go yeah, it’s really important to me and we’ll go full, all socially responsible. Um, but yeah, the one foot in each camp kind of yeah, it seems to be a quite, quite comfortable. It’s the compromise approach, I guess.

James: 

That’s cool, that’s interesting, and I know we said the data wasn’t there just at the start to say what the returns are going to be on these long term. But are you able to pluck some numbers off the top of your head in terms of average returns? Say for that the FTSE one that you were talking about earlier. How much is it appreciated on average every year?

Jon: 

I get that the time frame is not long enough for us to say what that might be going forward, but let’s compare it to the s&p, which is what like 9.1 percent total returns if you include dividends what I’ll do really curious yeah, if you give me just two sets, I’m just gonna pull those, yeah, yeah what I’ll do is I’ll pull up the portfolios that we use and we’ll just look at the 100 equity, because if we’re comparing to the s&p, then 100 equity is where we’d want to be, uh looking yeah, totally.

James: 

That would be really interesting to know. But, just as I say, just to reiterate what we said earlier, anybody, anybody who’s listened to this it’s not the only metric to make a flipping investment decision about what it’s done. And I actually see this all the time, that people see returns as the only metric, but really there’s a lot more to it. But I’m just genuinely curious, just straight up, how that compares or how that looks.

Jon: 

So these portfolios have the same asset allocation as in global asset allocation and the same equity allocation 100% equity but if we’re America, it’s the same percentages allocated to the US. So if we look at five years US. So if we look at five years on the socially responsible, the return has been 10.28% per year after investment costs but before any advisory costs, and then for the traditional it’s been 7.07 for that same period and largely, like I said, largely that’s down to the responsible having a higher weighting to tech, which over the last five years has done particularly well versus sort of more traditional weightings to oil and gas and other things. So the weighting has been favorable over this last few years. But five years is not enough to say this is a repeatable pattern going forward.

James: 

Yeah, totally, and is there any data on that over longer time frames, maybe 10 years, something like that?

Jon: 

um I don’t have any for the portfolios that we run, because those indexes that are within it and the, the funds haven’t been around that long, cool yeah, but I probably, if we uh, you fill for a moment I can, I can jump into absolutely, yeah, absolutely so.

James: 

Yeah, I ESG investing. I’m here to learn as well on this particular one, and it’s one that gets requested on the group and absolute ton, and I feel like, for me, what the whole point of this podcast is part of it is to actually delve down into the nitty gritty, because I feel like there’s going to be two camps out there. It’s going to be the people who see it as something hugely important. There is going to be the people who see it as something hugely important. However, they’re also a little unsure because they don’t they don’t know. Next, is this going to compromise their actual returns to some degree, which you know. This is why we’re delving into the returns here at this point, but we’re also quick to caveat everything and say listen, the reality is, the time frames are not long enough to really draw any serious conclusions. So, whilst, yes, let’s look at it straight up from the point of view of people who want their portfolios to grow at the greatest rate, maybe it does make sense Okay, maybe it does make sense to have some ESG, but, at the same time, would you want to put all of your wealth into it? At this stage, probably not, but it maybe actually makes sense, even from the point of view of someone who just wants to accelerate growth in their portfolio and actually get better returns. Real quick guys.

James: 

I’ve put together a special report for dentists, entitled the seven costly and potentially disastrous mistakes that dentists make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdentistoinvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them. I’m really looking forward to hearing your thoughts.

Jon: 

I think I would expect it to pick up similar returns to the index as a whole, because you know when you’re talking about how many companies are going to be held within an index compared to those that would be filtered out. On ESG. You’re not going to be screening out loads and loads of the market, but what you’ll have is pockets of performance where certain sectors will be outperforming or lagging, and that’s where you’ll get your difference. But over time that will generally even out cool and more and more companies are starting to produce the information that ESG rating companies want and also produce the targets, so more and more companies will be getting pulled into the ESG rating system. I’m just looking through. Oh okay, I haven’t got anything long enough that I can find quickly.

James: 

It’s all right, maybe, you know, maybe if, even if we were just straight up be able to see the returns of that one that you mentioned earlier, the fitzy uh, one that I can’t remember exactly for good fitzy for good, that’s an interesting one yeah, maybe that might be the best place to go. And then what we do is we just the average total returns, I suppose on that just it would be interesting. But, uh, I mean, yeah, yeah, we’ll see what we find on that one. Okay, let’s see what we find.

Jon: 

What we’ll do is just cut this bit out yeah, sure, I think I think the um, well, we’re cutting this, but then it’s fine. I can just take a moment just to point something is there anything else?

James: 

obviously we’re going to cut all this part out yeah, is there anything else really that’s, do you think that it’s worth me asking you about?

Jon: 

yeah, I think so, like um, I think one of the things that’s a really interesting discussion at the moment is what is ESG actually doing to improve the companies that are being invested in? Okay, so you?

James: 

know, is.

Jon: 

is it enough to invest in? Is investing in an ESG actually making these companies better?

James: 

Yeah, what are those figures, now that you’ve filled them up, john?

Jon: 

Okay, so this is the FTSE for good. It’s a UK one, so you’re probably best comparing it to, say, the FTSE 100 over the same period. But from October 2003 until now it’s done 161% as a return, if I just quickly add in the um index yeah, totally get some cold hard figures on that one for comparison yeah, versus the footsie 100 over that same period.

Jon: 

Say, yeah, that footsie 100 over that period has done 258% compared to 161% for the FTSE. Okay, so slight compromise there. Yeah, I’d say, particularly when we’re looking at UK, it’s going to be around oil and gas and British American tobacco, british aerospace we’re losing out on those companies which are quite big constituents of the FTSE. Yeah, got you. Yeah, so that’s where the footsie for good is an esg plus ethical screening fund and it will lose out during those periods. But there’s been periods of outperformance during that time yeah, yeah, but there you go.

James: 

I mean, is what you’re saying there is? Basically, is it a fair comparison on when you’re talking about that specific index? Because most of the 50 is flipping legacy companies from, however long ago, mining companies and all these ones that tend to not be looked upon so favorably by esg investors and hence don’t make the cut when it comes to that particular fund. So it’s an interesting one. You know, it’s one of those things. You know, it’s really hard to make science on something like this because there’s so many variables, you know, and yeah, just things to consider. So, obviously, when we invest in these ESG funds and we feel like we’re doing good for the environment and we feel like we’re supporting these companies that are ethical, they’re here to help, here to make the world a better place but would you say that it’s actually fair to say that, when we purchase these, that our money is going directly to these companies and it’s being put to good use?

Jon: 

well, at the moment there’s a really big debate about this. You know, because the esg has exploded over the last couple of years. There’s big um debates around how much of its greenwashing. You know there’s a lot of investment management funds that have just renamed their fund and put esg in it because most of the funds within it were okay for ESG purposes, but the actual content of the fund hasn’t changed and they’re not actually doing anything from an engagement perspective either. So I think this is where the values thing really comes into it.

Jon: 

When we’re talking with a client about why are we wanting to invest this way? Because if we’re wanting to avoid things because it impacts on our ethics, then absolutely we 100% want to avoid these things. But if we’re trying to actively make companies better, I think there’s a really strong argument to say that index investing in the general market is as good as a pure ESG approach. Because when an index investor the biggest index investing company in the UK is legal in general, they’re the biggest shareholder on the FTSE. When they’re buying these shares on behalf of their investors, they’re buying them knowing they’re not going to sell them these shares on behalf of their investors. They’re buying them knowing they’re not going to sell them. So what do they do when they’re on their earnings call with Shell and the shareholder? You know AGMs Well, they vote with a long-term mind. They vote with an ESG mind.

Jon: 

It was index investing companies like Vanguard, like Legal General, like iShares, who pushed for decarbonization within companies like Vanguard, like Legal General, like iShares, who pushed for decarbonization within companies like Shell and pushed them for this climate action.

Jon: 

What are you actually going to be doing about it? Because we’re still going to be holding you in 50 years time for our pension investors. So I think there’s a really good argument to make that investing in a general index portfolio, if you’ve got the right um index providers, it is as strong and in um is going to have as strong an impact as a, as an esg portfolio, because they’re still going to be driving that change in those companies. But you will have investments that may be conflict with your ethics and that’s where we have this. We don’t really do much pure ESG. We do the socially responsible where we’re saying we’ll move all these ones that conflict with our ethics out as well as have the ESG in there or we’ll go traditional. We do have a couple of clients who’ve chosen to go down the ESG route, but mostly it’s the socially responsible or traditional or a mixture of those two.

James: 

Awesome, Okay, cool, so really, really, really nice roundup or summary of ESG investing there. Just to put a cap on everything that we said today. Short and sweet, powerful and punchy tidbits of advice for anybody who wants to have more exposure to ESG in their portfolio. What can they do? How can they go about it? What are the things that they can do to investigate these funds, at least to a cursory level, so that it’s something actionable that people can implement?

Jon: 

So if you want to know whether the funds you’re investing in have what their ESG ratings are like, there’s three tools provided by MSCI that we use that are free, okay. So again, I’ll send you the links and we’ll pop those in the show notes. One of those is to look at companies. One of those is to look at indexes notes. One of those is to look at companies. One of those is to look at indexes, and one of those is to look at funds, and you can then drill down into your funds and see what the pros and cons are. So if it’s something you really care about, you can look at them and see what’s happening With all of this stuff. Just have your own philosophy about how you want to invest, do your research and then stick to it.

Jon: 

Don’t go into ESG because it’s the latest fad and the newspapers are telling you it’s doing great, because the more we follow the wind, the more we’re going to get blown over. Okay, we want our philosophy, want to stick to it. Know why we buy things and then you’ll know when it’s time to to get out of them. So I that’s why I’d go values over over doing it for profit 100 and the media.

James: 

They don’t do investors any favors, really, because it’s it’s made out like it’s this supposed to be, this flipping, frantic, high energy thing. Where you’re, you’re jumping into this fund, you’re jumping out of this one because the world has changed and now we need to do this, or this is a current trend, like you know. When you see on uh I’m not going to name any names, but certain financial literature institutions that I don’t subscribe to my mailbox I don’t even know why, sometimes because I don’t read the stuff that they send me it’ll say. It’ll say things like uh is now the time to invest in uranium and stuff like this.

James: 

It’s like, that’s just so stupid you know what I mean as if now is the time to go ahead and jump into it, whereas I mean for me, even if you, even if you did buy some uranium right and you made more returns on that than you might have expected you would have done otherwise. The thing about it is you have to actually think to yourself at what point am I going to take money out of this to actually realize this gain? Because chances are it’s going to rebalance, or it’s the rest of the market’s going to catch up, due to the law of averages that tends to do what happens to the mean yeah, reverts the mean. There you go, right. And then, for me, right if you’re, if you’re doing that and you’re jumping in because you’re getting swept away in the wind, just as what you said earlier, or you’re getting caught up in this tidal wave of frenzy for this particular asset, right, what? What’s the end goal? What is the end goal?

James: 

And, realistically, if you’re not going to do that, it might have been easier just to buy, use the tried and tested techniques to buy the market or buy, buy the average, because realistically for you that would be the best thing to do in the long run because you don’t have the time to have these more short-term jumping in and out of the market strategies and all I, all I would, and I’m not. This is not me saying that, you know, don’t invest in the esg and don’t do all of these things. What I am saying just it kind of aligns with what you’re saying effectively is that if you’re going to do it, stick to your guns, find a fund that works for you, okay, and then have it as a portion of your portfolio, and then what that means is that you can consistently invest in it and see some returns that are more aligned with your beliefs, rather than jump just as we were saying earlier, this frantic buying frenzy you’re getting swept away.

Jon: 

The values thing becomes really important. Because if, if you’re in that footsie for good and you’ve lagged the market but you know you’ve done it without conflicting with your values, yeah, would you have wanted those returns in the first place? If it’s from the things that you can’t stand, yeah. So you have to be happy with the returns you get because it’s stuck to your values. If it’s not your values, then don’t go down that road because you’re going to be restricting your investment criteria needlessly. So that’s why we have this kind of half and half. Some people, they really value it. Some people they don’t. Resg, socially responsible stuff very, very broad. It’s got 8,000 holdings compared to 10,000 for the wider market ones. So it’s not like we’re completely narrowed at the focus of the portfolios.

James: 

Got you Really interesting that that’s a conversation that you have with every single client. I had no idea that things had developed to that level might just be me mate oh, that’s cool, that’s cool.

James: 

Yeah, here’s the thing. Even if it is just you and your practice, it’s still really cool. You know what I mean. I I had no idea, certainly, that it was that far along, but, yeah, food for thought, john. Thank you so much for your time today. If anything that you have said has interested anybody in the podcast who has been listening to the podcast, where can they find out more about you?

Jon: 

My Twitter and Instagram is just Juniper underscore, john. You can find me on LinkedIn or our website is juniperwealthcouk.

James: 

Top stuff, John. Thank you so much for your time today. Interesting episode on ESG investing. We’ll catch up really soon, John. Thank you so much for your time today. Interesting episode on ESG investing. We’ll catch up really soon. Yeah, great to speak and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search Dentists who Invest on Facebook and hit join to become part of a community of thousands of other dentists interested in improving their finances, wellbeing and investing knowledge. Looking forward to seeing you on there.

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