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CFA Montréal members foresee strong demand for green policies and ESG factors in investment decisions

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An in-house survey of chartered financial analysts (Chartered Financial Analysts) members of CFA Montréal to obtain their perspectives on the impact of the COVID-19 pandemic reveals, among other things, that 92 % of respondents anticipate greater demand for green policies, and that ESG factors will play a greater role in investment decisions. Climate change will be at the heart of decision-making, with 64 % of respondents predicting a greater focus on the environment.

ESG factors and sustainable finance are taking on a considerable new role in the investment strategies of CFA Montréal members. In these times of crisis, they see this new trend as a major increase in investor awareness of environmental issues.

"Nearly 70 % of our members envisage less reliance on China for global trade and more relocation, among other things, due to supply chain issues and de-globalization. It will be interesting to observe the evolution of the local purchasing trend in relation to the anticipated strong demand for green policies in investment decisions for the economy as a whole. After ten months of the pandemic, the financial sector has remained very active, and almost half of our members anticipate a return to pre-pandemic employment levels within the next 12 to 24 months. This is faster than during the economic crisis of 2008 to 2010. In the meantime, our members will be focusing on two things: investment diversification and resilience," explains Carl Robert, CFA, President of CFA Montréal.

According to CFA Montreal members, equity markets (46 %) and private equity (38 %) are the two asset classes that will offer the best return opportunities in 2021. Ten months after the start of the pandemic, equity classes in the information technology (40 %) and healthcare (29 %) sectors remain the most attractive, while bond (51 %) and real estate (49 %) markets will be the most affected by the pandemic over the next year.

With interest rates at historically low levels, 72 % of respondents believe that institutional investors will reduce the bond weighting of their portfolios. On the other hand, 60 % of members anticipate an increase in the weighting of asset classes related to infrastructure, 51 % to private debt, 50 % to private equity, 41 % to equity markets and 31 % to real estate.

Click here to access the survey results.

Survey highlights[1]

  • 90 % believe that massive central bank intervention in financial markets since the financial crisis and the COVID-19 crisis has artificially inflated asset prices.
  • 94 % of respondents believe that the high level of central bank balance sheets will remain high over the medium term.
  • 46 % predict that it will take between 12 and 24 months, and 28 % between 24 and 36 months, to return to pre-pandemic employment levels.
  • 60 % of respondents felt that investor portfolios were well constructed to weather the crisis.
  • 65 % believe that Canadian personal income taxes will increase, of which 54 % expect it to be between 12 and 24 months.
  • 73 % expect income taxes for US companies to rise, while 49 % expect them to rise for Canadian companies.

The survey was conducted online by CFA Montreal among 2,834 members from November 19 to December 8, 2020, with 349 responding. Visit maximum margin of error is 5 %, 19 times out of 20.

[1] Since participants could tick more than one answer to some questions, and figures are rounded, percentages may not add up to 100 in all cases.

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