More than Green: Sustainable and Responsible Investing will Become the New Standard

Is your investment portfolio positioned for a future that may look vastly different from the past?

Some of the world’s largest investors are asking this very question.  They are rightly concerned that large trends such as climate change, surging population growth, and resource scarcity will negatively impact their returns over time...  Click here to read more 

Why Sustainable Investing is Critical to Your Retirement Plans

There once was a time when most American workers had a defined benefit pension plan. Today, it is more likely that you are responsible for your own retirement plan. Whether or not you are covered by a traditional “pension plan”, someone is charged with managing risk. Risk is more than market volatility. It is company specific, as well.  “Could carbon legislation be one of those risks?” investors ask. “How could a company’s reputation and brand be damaged from environmental or social missteps?” Many large pension managers are trying to mitigate risks by building sustainable and responsible portfolios.

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Betting on Siemens with Offshore Wind

A late comer to the wind turbine manufacturing industry, Siemens AG entered the wind business six years ago when it purchased the veteran Danish wind turbine manufacturer Bonus Energy. Europe’s largest engineering firm, Siemens is also one of the world’s primary suppliers of transmission infrastructure equipment.

In 2010, the company’s 3 and 3.6 MW wind turbines emerged as the top choice for offshore wind projects. Currently ranked 6th in the world in terms of total wind turbine sales, Siemens is expected to creep up to among the top three wind turbine suppliers by the end of 2012. While other turbines have reported weak sales over the past year, Siemens is showing strong sales in both onshore and offshore wind arenas. Click here to read more

China is GM’s Number One Market

Where are the most Buicks in the world sold? Not in the US, but China. This year, sales of American-based General Motors (GM) cars in China outpaced that same consumption in the US. This development has ramifications for the auto industry and international climate policy.

USA Today reports that in 2010, Chinese consumers bought 2.35 million cars from GM. Demand in the US was about 136,000 less over that same time period. The total cars sold for 2010 represent a 29% increase over the year before. In comparison, US sales rose just 6%... Click here to read more

Markets and Earnings Commentary -- Mid-January 2011

Thus far, the 2011 earnings season has been decent for US companies. While only a small number (57, as of this writing) of the S&P500 have reported thus far, nearly 3/4 of them (73.6%) have beaten analysts' estimates.  Before you say that the analysts have set the "bar" too low, consider the level of earnings at this point in the cycle. That level is higher than you might expect.  Analysts project S&P500 operating earnings of $95 for 2011.  With the S&P still trading below 1300, this equates to a P/E of less than 13.5 times, versus a long term average of 15.

Does this mean that the rally in US stocks has further to run?  We'd prefer to conclude that valuations are supportive of current index levels.  It will likely take further earnings advances to convince investors that breakeven levels are lower than before (thanks to aggressive cost cutting), and that companies can actually grow the top line (i.e., sales).  Given that a disproportionate share of sales growth is coming from outside the US, we'd wager that top line growth will also surprise analysts for a while longer.

One positive to consider is recent "flow of funds" data.  The mindless buying of bond funds has finally reversed itself, leaving stocks as a likely beneficiary of more inflows.  For investors with longer time horizons, we continue to see high dividend shares as superior investments to most fixed income categories.

Principal Global Investors joins UN Principles for Responsible Investment

Principal Global Investors, the Des Moines, Iowa-based asset manager with $227.4bn (€170bn) in mostly pension fund assets under management, has become the latest “mainstream” firm to sign up to the United Nations Principles for Responsible Investment.

The firm – which runs assets for 10 of the 25 largest pension funds in the world – says the appropriate consideration of environmental, social and governance (ESG) issues is part of delivering superior risk adjusted returns.

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Dodd-Frank mandates "Conflict Minerals" reporting

The Dodd-Frank Act has gotten a lot of attention, mostly for its sweeping new regulations affecting the financial industry. But buried in all those pages is also a small provision aimed at addressing the problem of conflict minerals originating from the Democratic Republic of Congo (DRC). Dodd-Frank requires companies under the jurisdiction of the SEC to report annually on whether they are using minerals from the DRC or its nine immediate neighbors. All companies must also report on the due diligence they have undertaken to verify their supply chain and avoid tainted metals. This reporting will especially affect chipmakers and other electronics firms who use ores such as tungsten, tantalum, gold and tin in their manufacturing processes. Major firms like Dell, Intel, Hewlett-Packard and others have been proactively managing their supply chains to meet this challenge. Read More...