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Breaking insights on the economy, market volatility, policy changes and geopolitical events

 

May 23, 2023

What to expect as the debt crisis comes down to the wire

WITH DEBT CEILING TALKS STALLED OVER THE WEEKEND, the president and Speaker of the House met Monday in hopes of averting an historic default on payments by the U.S. government. Without an increase in the nation’s debt ceiling (the amount it can legally borrow) the government by June 1 could be out of money to support Social Security and Medicare recipients, pay military personnel and other government workers, pay interest to Treasury bondholders, or meet myriad other obligations. 

 

The face-to-face meeting (in place of negotiations by staffers) represents both the seriousness of the situation and reason for hope that a resolution may be at hand, says Dan Clifton, head of Washington Research for Strategas Research Partners. “That doesn’t guarantee a deal but it puts things on a better trajectory.”

Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank next to his quote “Consumers have solid balance sheets, corporate profit margins are holding steady, and the S&P 500 is up almost 10% since the start of 2023.”

In the end, neither side wants a default that could send shockwaves through the U.S. and global economies, adds Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank. “That would almost certainly result in a downgrade in the government’s credit rating, accompanied by a fresh spike in interest rates,” Hyzy says. “This would make borrowing more expensive for consumers and corporations already facing the highest rates in over a decade.”

 

Clearing the remaining hurdles

Despite positive signs, thorny issues remain before both sides agree to raise the $31.4 trillion ceiling. Clifton points to four key areas:

 

  • Democrats have been resisting Republican calls for spending cuts as a condition of raising the debt ceiling. A possible compromise: Eliminate $60 billion in COVID funding that has not yet been obligated.
  • Republicans want caps on discretionary (non-entitlement) spending, representing a third of the federal budget. While cuts are unlikely, compromise might reduce spending growth from 2.5% to 2% per year over the next decade, saving about $1 trillion.
  • While the administration opposes proposed work requirements for Medicaid and food stamp recipients, negotiators may agree on modest reforms to Temporary Assistance for Needy Families programs, enabling both sides to claim victory.
  • One area where the sides remain most divided involves expedited energy permitting aimed at increasing production. Democrats want to accelerate renewable energy production and transmission; Republicans seek faster permitting for natural gas. While the issue is not directly related to the budget, negotiators may include language on renewables and natural gas, creating political “wins” all around, Clifton believes.

 

What’s next when the crisis ends?

When the debt ceiling lifts, investors should still expect short-term market and interest rate volatility as The Treasury, using “extraordinary measures” to pay bills since January 19, re-fills its depleted coffers, Hyzy warns. Over the next several years, the need for government austerity, after historic COVID relief spending, could create economic headwinds, Clifton adds.

 

The good news: “Consumers have solid balance sheets, corporate profit margins are holding steady, and the S&P 500 is up almost 10% since the start of 2023,” Hyzy says. All of which speaks to the importance for investors not to react in haste to the latest debt ceiling reports or other financial news, and to focus instead on their long-term goals.  Staying the course and maintaining a well-diversified portfolio can help to weather the market’s shorter-term ups and downs. 

 

For more on the debt ceiling crisis and its potential effects on markets and the economy, read the recently updated CIO report, “Debt Ceiling Questions and Answers.” For regular weekly insights from the Chief Investment Office, tune in to the  CIO Market Update audiocast series.

 

 

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May 5, 2023

Will the Fed’s latest rate hike be the last for a while?

IN ITS ONGOING EFFORT TO TAME INFLATION, the Federal Reserve (Fed) hiked interest rates by another 25 basis points at its latest policy meeting. It was the 10th straight increase in a little over a year, lifting the fund rate to its highest level in 16 years.1 But that’s not the big news, says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. More interesting is what the Fed signaled about its intentions for possible future hikes.

The next Fed meeting takes place on June 14 and 15. In the meantime, there are other potential challenges to keep an eye on.  Watch the video above to find out why Hyzy says, “We expect markets to continue in what we call a choppy, grind-it-out state” and what you can do to navigate possible ongoing volatility.

 

1 The Wall Street Journal, “Federal Reserve Raises Rates, Signals Potential Pause,” May 3, 2023.

 

 

 

May 2, 2023

New rules tighten electric vehicle tax credit eligibility

IF YOU’RE LOOKING FOR A NEW CAR THIS SPRING, you may be thinking: Is this the year I finally go electric? Electric vehicle (EV) sales have surged as the larger auto market has struggled in recent months,1 with available state and federal tax credits at least partly driving adoption. Charging stations are popping up at gas stations, office complexes and condos, and as the technology evolves, prices are finally beginning to come down.

Mitchell Drossman, head of national Wealth Strategies, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “Even if you don't qualify for a tax credit, there may be good financial as well as environmental reasons to consider switching from pump to plug.”

Will you qualify for a tax credit?

Before you make the switch, here’s what you should know about the federal EV tax credit of up to $7,500 for new EV purchases. While last year’s Inflation Reduction Act extended the credit through 2032, it also tightened rules for claiming it. Under those new rules, only individuals earning $150,000 or less ($300,000 for couples) are eligible.2 And even if you personally qualify, your EV must meet strict requirements for percentage of mineral and battery components sourced in North America or by U.S. free trade partners.3

 

Regulations implementing these rules, which took effect on April 18, reduced the number of EVs that qualify for the full credit. Today, “only a relative handful of models qualify, compared with the 72 that made the cut last year,” says Mitchell Drossman, head of National Wealth Strategies in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank. And, over the next several years, these sourcing percentages will rise, meaning additional vehicles could fall out of compliance. But, overall, the new rules take a taxpayer-friendly approach that should enable more EVs to qualify for the credits in the coming years, Drossman adds. This Department of Energy site can help you determine if yours makes the cut.

 

If your model is eligible but your income is too high, leasing could be an option. Companies that buy and lease eligible EVs earn the tax credit and may be willing to pass that savings along as an incentive.4 (Check whether your state offers a tax credit or sales tax exemption for leased or purchased EVs.) Another option: As of January 1, 2023, if you buy a used EV from a dealer for $25,000 or less, you could also be eligible for a federal tax credit equal to 30 percent of the sale price, up to a maximum credit of $4,000.

 

A growing market — for drivers and investors?

By 2025, EVs could represent 20% of U.S. vehicles, a sevenfold increase over 2021, research by Bank of America Institute suggests.4 Yet hurdles remain, to be sure. For example, while U.S. charging stations are growing, the country will need far more than the current 140,000 in order to support a robust EV market, according to S&P Global.5

 

So, is this the year for you to seriously consider going electric? “As with any financial decision, it’s important to research carefully and make a choice that suits your needs,” Drossman says. “Even if you don’t qualify for a tax credit, there may be good financial as well as environmental reasons to consider switching from pump to plug.”

 

For more insights on the size of the EV market, availability of charging stations by state, and other EV trends,  read  “EVs on the Charge,” by the Bank of America Institute.  And listen to “The EV Revolution” Merrill Perspectives podcast.

 

Get more tax-related insights by exploring “5 Times You Should Always Ask: How Will This Affect My Taxes.”

 

1 Cox Automotive, “In a Down Market, EV Sales Soar to New Record,” Jan. 13, 2023.

2 IRS, “Credits for new Clean Vehicles Purchased in 2023 or After,” Updated April 17, 2023.

3 U.S. Treasury, “Treasury Releases Proposed Guidance on New Clean Vehicle Credit to Lower Costs for Consumers, Build U.S. Industrial Base, Strengthen Supply Chains,” March 31, 2023.

4 Bank of America Institute, “EVs on the charge,” Nov. 7, 2022.

5 S&P Global, “EV chargers: How many do we need?” Jan. 9, 2023.

 

 

 

April 14, 2023

What’s at stake in the debt ceiling stalemate?

THE CURRENT FEDERAL DEBT CEILING DEBATE is rapidly approaching the “X-date” — the day when the government exhausts its ability to borrow money to meet its obligations, such as funding Social Security, Medicare, military salaries and other expenses. “This could come as early as June 1, according to Treasury Secretary Janet Yellen,1 unless a divided Congress and the White House come together to raise the debt ceiling,” says Mitchell Drossman, head of National Wealth Strategies in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank.

 

A recent CIO report, “Debt Ceiling Questions and Answers,” explains the factors that could determine when funding will run out, how the situation could affect the markets, and what investors can consider doing as they  navigate the uncertainty.

Marci McGregor, head of Portfolio Strategy, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “While a resolution is likely, uncertainty in the short term could mean ongoing market volatility and risks for investors.”

Where do things stand now?

The government reached its $31.4 trillion debt ceiling — the amount of debt it is legally allowed to accumulate — in January. For now, the Treasury Department is using accounting steps called “extraordinary measures” to pay bills. When those run out, the government risks defaulting.

 

Is a compromise in sight?

“While a default would wreak havoc on U.S. and global financial markets, that worst-case scenario is highly improbable,” says Marci McGregor, head of Portfolio Strategy in the Chief Investment Office for Merrill and Bank of America Private Bank. “Since 1960, the government has navigated 78 debt ceiling standoffs without defaulting,” notes Drossman. Pressure for a compromise — perhaps a combination of a higher debt ceiling and some spending cuts — will intensify as the X-date nears, he adds.

Mitchell Drossman, head of National Wealth Strategies, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “Since 1960, the government has navigated 78 debt ceiling standoffs without defaulting.”

Meanwhile, though, market uncertainty could increase volatility, especially for risk assets such as stocks. During a 2011 debt ceiling crisis that ended two days before the funding ran out, stocks on the S&P 500 fell by 17%, Drossman notes. Financials, energy and real estate struggled most, while consumer staples and utilities (which consumers need regardless of economic conditions) fared better.

 

“The longer it takes for Congress to reach a 2023 debt ceiling agreement, the more likely it is that risk assets will experience volatility,” McGregor says. “And the debt ceiling drama is just one source of potential volatility.” Factors ranging from inflation to Federal Reserve monetary policy and a slowing economy could have an even greater impact.

 

What can investors consider doing?

“While a resolution to the debt ceiling impasse is likely, uncertainty in the short term could mean ongoing market volatility and risks for investors,” says McGregor. For investors, the most important task may be to recognize what’s going on and remain calm even when markets temporarily don’t. “Volatility is a normal part of investing,” McGregor notes. “A portfolio well diversified across high-quality stocks and bonds is the best approach for the current ‘grind-it-out’ market conditions.”

 

For more insights from the Chief Investment Office, read “What Can You Do When the Markets Get Volatile?” and tune in to the  CIO Market Update audiocast series weekly.

 

1 Associated Press, “Treasury’s Yellen Says US Could Default As Soon As June 1,” May 1, 2023.

 

 

April 6, 2023

Sustainable investing: What you need to know now

“INVEST IN OUR PLANET” is the theme of Earth Day 2023, set for April 22 — an annual call to action to commit to helping reduce the effects of climate change. “Individual investors have an unprecedented opportunity to support the shift to renewable energy, while pursuing their own financial goals,” says Sarah Norman, head of ESG Thought Leadership for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank.

 

At the same time, Norman acknowledges that many investors today have questions about how current events, from the conflict in Ukraine to global inflation and more, might affect their sustainable investments. In the Q&A below, Norman addresses three key questions and highlights the short- and long-term risks and opportunities emerging.

Sarah Norman, head of ESG Thought Leadership, the Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “The Ukraine crisis has only accelerated long-term ambitions for a world powered by renewable energy.”

Q: What effect will the Ukraine-Russia conflict have on renewable energy as countries scramble for oil to meet their energy needs?

A: The energy shock related to Russia’s 2022 invasion of Ukraine may delay, but won’t derail, global efforts to curtail greenhouse gas emissions, Norman says. “While governments have embraced fossil fuels to meet their immediate needs, the Ukraine crisis has only accelerated long-term ambitions for a world powered by renewable energy.”

 

Key takeaway: “In the past two decades, significant cost declines and technological improvements have made clean energy more economically competitive,”1 Norman says. Investors have more options than ever to invest in addressing climate change, she believes. As one example, the 2022 Inflation Reduction Act earmarked $369 billion for clean energy spending. Industries likely to benefit include not just renewable energy and electric vehicles, but entire sectors such as industrials, materials, utilities and energy.

 

Q: Should I divest fossil fuels entirely — or is there a transition period to consider?

A: “The transition from oil and gas to renewable energies will take decades,” Norman says. And with many oil and gas companies developing technologies to transition their own businesses, investors may want to be part of that story. “In the short term, stocks linked to energy prices may also provide an important hedge against inflation.”

Sarah Norman, head of ESG Thought Leadership, the Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “In the short term, stocks linked to energy prices may also provide an important hedge against inflation.”

Key takeaway: “Rather than divesting entirely, consider best-in-class energy companies likely to lead the transition from fossil fuels,” suggests Norman. “At the same time,” she says, “explore long-term investments in clean energy.” This may include direct investment in renewables, or sectors such as utilities, industrials and materials, likely to benefit from the energy transition.

 

Q: What commodities could be attractive in a net zero carbon future?

A: “Going green won’t be easy,” Norman says. Renewable power requires fossil fuels, metals and minerals. “Copper, for example, is essential to electric vehicles, charging stations and supporting the electrical grid.”2 Other essential commodities include cobalt, nickel and zinc, as well as water — large quantities of which are needed for mining and mineral processing.

 

Key takeaway: Consider commodities as part of a broader strategy of “FAANG 2.0” investments, Norman suggests. That acronym refers to areas likely to benefit during the energy transition, including fuels, aerospace and defense, agriculture, nuclear and renewables, and gold and other metals and minerals.

 

For more insights, read “Portfolio Construction and the Energy Transition: Q&A on What Investors Need to Know,” from the Chief Investment Office, and speak with your advisor about the role that sustainable and impact investing could play in helping you meet your goals.

 

1 Lazard, “Levelized Cost of Energy Analysis,” 2021.

2 Wood Mackenzie, “Copper: Powering up the Electric Vehicle,” August 13, 2019.

 

 

 

March 27, 2023

Proposed tax hikes and what they might mean for you

THE ADMINISTRATION’S $6.9 TRILLION 2024 BUDGET, released on March 9, includes $4.5 trillion in income, corporate, and estate and gift tax increases over 10 years.1 It’s estimated the hikes will reduce the growth of the deficit by $2.9 trillion over that period. “While the budget has little chance of Congressional approval as is, it will likely frame negotiations over the debt ceiling in the coming months,” notes Mitchell Drossman, head of National Wealth Strategies in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank.

Mitchell Drossman, head of National Wealth Strategies, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “While the budget has little chance of Congressional approval as is, it will likely frame negotiations over the debt ceiling in the coming months.”

“Some of the proposed tax increases are new, but most are recycled from last year’s budget,” Drossman says. “There are also many proposed tax cuts.” A recent CIO tax alert, “Income and Transfer Tax Proposals in Administration’s Fiscal Year 2024 Budget” details the plan. Here are some highlights:

 

Individual income tax proposals

The budget would reimpose the top 39.6% income tax rate for married couples with taxable income greater than $450,000 (or $400,000 for individuals). Another major change: For taxpayers with income higher than $1 million (married or single), capital gains would be taxed at the 39.6% ordinary income tax rate, rather than the lower capital gains tax rate.

 

Among other increases, “The current 3.8% investment income surtax would rise to 5% for investment income over $400,000, and the types of income subject to the tax would significantly expand,” Drossman says.

 

Wealth-transfer tax proposals

A host of proposed changes would affect taxes on wealth transfer, whether through lifetime gifts or as part of an estate. One prominent change could limit the long-term effectiveness of generation-skipping trusts (GSTs), a popular means for families to pass wealth down to grandchildren and subsequent generations while reducing potential estate taxes. “Under the proposal, GSTs would be limited to no more than two generations below the taxpayers,” Drossman says. 

 

Corporate tax proposals

Many businesses, too, would see their taxes rise. Most notably, the top corporate income tax rate would rise to 28% (from 21%) and the tax on overseas profits by U.S. companies would double, to 21%. The plan would also increase the tax rate on corporate stock repurchases to 4%.

 

Expanded tax credits ease the pain

“It’s not all increases,” Drossman says. “The proposed budget also includes an enhanced child tax credit, an expanded earned income tax credit, generous health insurance premium tax credits and increased employer-provided childcare tax credits for businesses, to name a few.”

 

While these changes are currently just proposals, now might be a good time to familiarize yourself with them so that you can begin to plan ahead for tax efficiency in 2024. Read the report for full details and speak with your tax professional about what they might mean for you. For insights on investing tax-efficiently, read “How to Be a Tax-Aware Investor” and check in with your financial advisor.

 

1 CNN, “Biden’s Budget Lays Groundwork for High-Stakes Battles Ahead,” March 9, 2023.

 

 

 

March 20, 2023

Navigating current volatility

Listen to the audiocast below for insights from Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank, on what’s driving market uncertainty, the path to market stability, key indicators to watch and how investors can prepare for steadier times ahead.

Tune in regularly to the CIO Market Update audiocast series for the news and insights you need to navigate today’s fast-moving markets.

 

 

 

March 8, 2023

What women have in common with the U.S. economy

“WOMEN’S POWER OF THE PURSE is simply staggering, globally,” says Lauren Sanfilippo, senior investment strategy analyst with the Chief Investment Office, Merrill and Bank of America Private Bank. Last year, women’s income topped $24.5 trillion globally.1 “That puts women on a par with the total size of the U.S. economy,” she adds. “Simply put, women have become one of the largest economic forces in the world.”

Lauren Sanfilippo, senior investment strategy analyst, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “Women’s economic strength has clear investment implications.”

Some other milestones to celebrate this International Women’s Day and throughout the year: The number of female CEOs — 53 — is at an all-time high.1 Women are more likely to be enrolled in college today than men, and degree-holding women are more likely to be employed than men with higher ed degrees.1 They are, however, vastly underrepresented in the STEM professions, which may offer some of the fastest growing and highest paying jobs of the future, notes Sanfilippo.  Clearly, more progress is needed. According to the United Nations, which measures progress towards gender equality as part of its Sustainable Development Goals, more than 3 billion girls and women lived in countries with “poor” or “very poor” scores in 2020.1

 

Ways to invest in women’s spending power

Achieving gender equality benefits everyone, says Sanfilippo. Research has shown that women invest a larger portion of their income in their families and communities than men.2 But that’s not all. “Women’s economic strength has clear investment implications,” she adds. Companies that cater to women — and value their talents in the workforce — are best positioned for long-term growth,” she believes. Global brand leaders across multiple sectors, from automobiles to technology and high-end luxury, can benefit from women’s spending power. And on a global level, nations that prioritize gender equality should experience stronger long-term growth rates.

 

To learn more about women’s economic progress — including which countries are making the most progress in reaching the UN’s gender equality goals — read  “Reality Check: The Promise and Plight of Women.”  For more insights, visit our women’s resource hub and sign up to receive our latest women’s content.

 

1 “Reality Check: The Promise and Plight of Women,” Chief Investment Office,” March, 2023.

2 “Investing in Women and Girls,” OECD.org, 2018.

 

 

 

February 13, 2023

Early 2023 surprises hint at improving markets ahead

DESPITE ALL THE TALK about high inflation, global turmoil and the possibility of recession, “so far it’s been a surprisingly good year for many investors,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.

Among the surprises: U.S. stocks posted strong gains in January, major global indexes started the year up 5% or more, and the Federal Reserve’s (the Fed’s) .25% rate hike in February was about half the size of December’s increase.1 “It’s a sign of Fed confidence that inflation is finally moderating,” believes Hyzy. “We’re not out of the woods yet, and we still think a mild recession is likely later this year or in early 2024,” he says. “But what we are seeing is a glimpse of a new and improved economic and market cycle ahead.”

 

In the video above, Hyzy offers a two-part investing approach to help investors prepare for a time of greater stability 12 to 18 months out and manage investments in the meantime. “As you look ahead for potential opportunities,” Hyzy says, “remember it’s important to stay diversified across different types of assets and within each asset class. Market direction can change quickly — many times without clear signals.”

 

Read “Distortions Are Rebalancing and Markets Are Applauding” for more actionable insights from the Chief Investment Office (CIO), and tune in to the CIO Market Update audiocast series for weekly commentary from our analysts.

 

1 The Conference Board, “Fed Hikes by 25 BPS, but Indicates Terminal Rate Is Close,” February 1, 2023.

 

 

Important Disclosures

 

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

 

Opinions are as of the date of these articles and are subject to change.

 

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

 

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S" or “Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). 

 

All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all investors.

 

Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.

 

These risks are magnified for investments made in emerging markets.  There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.

 

Income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT).

 

Retirement and Personal Wealth Solutions is the institutional retirement business of Bank of America Corporation (“BofA Corp.”) operating under the name “Bank of America.” Investment advisory and brokerage services are provided by wholly owned non-bank affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill"), a dually registered broker-dealer and investment adviser and Member SIPC. Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC.

 

You have choices about what to do with your 401(k) or other type of plan-sponsored accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over a 401(k) from a prior employer to a 401(k) at your new employer, take a distribution, or leave the account where it is. Each choice may off er different investments and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment (particularly with reference to employer stock), and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care.

 

Diversification does not ensure a profit or protect against loss in declining markets.

 

Sustainable and Impact Investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.

 

 

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