medium_templeton esg article (1).jpg

small_templeton esg article (1).jpg

thumbnail_templeton esg article (1).jpg

templeton esg article (1).jpg

## **ESG DISCLOSURES: LOOKING BEYOND THE SURFACE**
Sustainable investing is more than about seeking companies with top-notch environmental, social and governance (ESG) profiles.

Across emerging markets, corporate ESG disclosures are uneven, and therein lies the opportunity for investors who look beyond the surface, according to Franklin Templeton Emerging Markets Equity’s Andrew Ness and Preyesh Patel.

Sustainable investing is more than about seeking companies with top-notch environmental, social and governance (ESG) profiles. It is also about uncovering companies that are improving their ESG footprints, and their disclosures go a long way toward signaling and evidencing such progress. Yet, across emerging markets (EMs), corporate ESG disclosures are uneven and broadly lag those in developed markets (DMs).

Investors relying solely on published information to assess EM companies’ sustainability efforts and ambitions risk missing the mark significantly. Therein lies the opportunity for investors who can look beyond the surface. In our decades of investing in EMs, we have developed insights into companies’ sustainability journeys through our local research and longstanding engagement with managements.

We distil three key observations from our analyses and experience:

- EM companies are not entirely behind their DM peers in ESG disclosure. Firms in select EMs have been more transparent. Also encouraging is the increasing openness that EM companies have displayed in recent years. Our local presence is an advantage here as we are often able to establish deeper insights though our relationships with companies.
- Market-wide ESG policies and initiatives are gaining ground in EMs. We expect this trend to boost companies’ ESG disclosures and public accountability. In fact, we have been heavily involved in driving the agenda around policy advocacy.
-  Investors can advocate better disclosures and other improvements through engagement with companies, regulators and other stakeholders. The relationships of trust we have built often give us the leeway to discuss material issues and help shape change.

We believe that some of the most overlooked sustainable investment opportunities in EMs lie in companies making positive ESG transitions. Evolving ESG disclosures—and their impact on investors’ ability to perceive and position for these transitions—will be key to watch.

## A VARIED DISCLOSURE LANDSCAPE
Sustainable investing is often associated with the search for ESG leaders, but that focus can overshadow the investment opportunities that also lie in companies boosting their ESG credentials. This pitfall deserves particular attention in EMs, where a general perception of their ESG gap relative to DMs has kept them off some sustainable investors’ radar. That caution has persisted despite EMs’ growing ESG awareness over the years. To some extent, EM companies’ ESG reporting shortfalls may have held back investor confidence. Using Bloomberg’s ESG disclosure scores as a proxy, we see that EM companies as a whole trailed DM firms in the amount of ESG data that they reported publicly.1 By individual market, however, the picture is a lot more nuanced. Levels of corporate ESG disclosure varied widely across EMs, with select markets such as Malaysia and Brazil faring better than the United States. Markets such as Taiwan and India also scored comparably well. Taking a broad-brush view of EM companies’ disclosure deficit would discount the pockets of strong reporting practices that exist.

What we also find promising is the growing transparency that most EM companies have shown. Over the past few years, corporate ESG disclosure scores rose more for EMs than for Europe and Japan.2 The faster pace of advance for EMs could partly reflect the lower base that they started from, and we think they have room to progress further.

Bright Spots in Emerging Market Corporate Disclosures
Market Average Bloomberg ESG Disclosure Score (0-100)
![templeton esg article.jpg](/uploads/templeton_esg_article_aa62352070.jpg)

Source: Bloomberg. Latest data as of FY2020 (or, if unavailable, FY2019). Proprietary Bloomberg score based on the extent of a company’s ESG disclosure. Companies that are not covered by ESG group will have no score and will show N/A. Companies that do not disclose anything will show a value of ‘0.’ The score ranges from 0.1 for companies that disclose a minimum amount of ESG data to 100 for those that disclose every data point collected by Bloomberg. Each data point is weighted in terms of importance, with data such as Greenhouse Gas Emissions carrying greater weight than other disclosures. A consistent list of topics, data fields, and field weights apply across sectors and regions. This score measures the amount of ESG data a company reports publicly and does not measure the company’s performance on any data point. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results. Important data provide notices and terms available at www.franklintempletondatasources.com.

## TOP-DOWN POLICY TAILWINDS
ESG disclosures in EMs have improved along with the introduction of market-wide ESG policies and initiatives. We expect this trend to accelerate as regulators and investors become increasingly ESG-conscious, and especially as interest in sustainable investing grows. Stewardship codes, corporate governance codes and other directives play an influential role in encouraging disclosures.

Several EMs with above-average Bloomberg ESG disclosure scores have continued to strengthen their policies. Taiwan, for example, launched a new three-year corporate governance roadmap for listed companies in 2020. As part of measures to enhance information transparency, more companies would have to issue sustainability reports. With Chinese being the predominant language in Taiwan, our analysts’ local language skills are often pivotal for accessing critical information here.

India began to apply a stewardship code for mutual funds in 2020, urging institutional investors to boost their monitoring of investee companies and engagement with them. This year, policymakers expanded the scope of companies’ business responsibility reports, requiring them to file more quantifiable and granular ESG information.

Meanwhile, certain EMs lagging their peers in ESG disclosures have sought to improve. South Korea’s state pension fund and leading institutional investor National Pension Service adopted a stewardship code in 2018, galvanizing a push for greater corporate accountability in the country. While Korea could benefit from a clearer corporate governance roadmap, it has implemented some long-awaited reforms.

China’s relative weakness in ESG disclosures belies its considerable step-up over the years. Although China does not have a stewardship code, the China Securities Regulatory Commission (CSRC) released a new corporate governance code in 2018. This year, the CSRC revised annual and semiannual reporting rules for domestically listed companies, requiring them to disclose environmental and social responsibility information under a separate section. The new rules are a meaningful signal of positive change, especially in light of China’s carbon neutral pledge and overall elevated emphasis on ESG. In our view, China’s move toward mandatory ESG reporting will also likely improve the quality of disclosures that we see from companies.

## STOCK EXCHANGES PAVE THE WAY FORWARD
Also noteworthy are stock exchange initiatives aimed at boosting listed companies’ ESG practices—and drawing sustainability-focused capital to their markets. Some 93% of EMs have stock exchanges that are members of the Sustainable Stock Exchanges initiative, a United Nations (UN) partnership program that explores how bourses can enhance ESG performance and encourage sustainable investment.3 Some stock exchanges have actively pushed for more ESG disclosures. In the Middle East, where disclosure rates have largely trailed both EMs and DMs, almost all exchanges have communicated the need for companies to incorporate ESG considerations into their business strategies and reporting. Several exchanges have developed ESG reporting guidelines for companies. Some, including Tadawul stock exchange in Saudi Arabia and Boursa Kuwait, have announced plans to launch ESG indexes.

We expect ESG indexes to advance the sustainability agenda considerably. Companies seeking inclusion in such indexes have powerful incentives to meet qualifying ESG criteria and report the relevant metrics and targets. Increased disclosure, in turn, deepens their public accountability on ESG issues and could spur them on to bolster their ESG credentials. Taken together, we think that ESG policies and initiatives have a favorable impact on corporate behaviors.

Backing our belief, we have seen many EM companies display increased shareholder friendliness over the years, often reflected in a greater willingness to repurchase shares or raise dividends. In line with the latter, the overall dividend payout ratio in EMs climbed from 36.2% at end-2017 to 48.6% at end-2020.4 South Korea has been one of the strong improvers on this front, riding on the momentum of policy shifts in the country. Improved corporate behaviors could also manifest in stronger business models and earnings quality, as well as lower ESG risks. Market recognition of all these changes could drive upward valuation re-ratings.

## THE VALUE OF RESEARCH, ENGAGEMENT AND PARTNERSHIP
Recall that ESG disclosures across EMs are uneven. While third-party ESG ratings are available, research agencies differ in their scope and focus of company coverage. Data gaps and subjectivity can also lead to inconsistent ratings.

At times, we have found companies receiving low ESG grades, more due to patchy disclosures than to fundamental problems. We use published information as a starting point for research and incorporate our own findings to form forward-looking views on companies’ ESG prospects. The additional work requires in-depth local studies of individual markets and companies, as well as first-hand access to managements and other stakeholders.

Our engagements go beyond the corporate level. We have frequent discussions with regulators, stock exchanges, corporate governance bodies and other stakeholders in our advocacy of sound capital market policies, which can have a far-reaching impact on economic development, corporate behavior and investor interests. We are also members of select stock exchange committees that discuss ESG and other issues.

We believe that meaningful ESG improvements take time. This makes sustainable investing a lot about identifying companies seeking or making progress on their ESG journeys, just as it is important to spot existing ESG leaders. However, varying levels of ESG disclosures in EMs are likely to keep investors from getting a full view of companies’ ESG direction.

Even amid growing transparency, we still find proprietary on-the-ground research and sustained company engagement vital in discerning businesses’ sustainability commitment and intentions. Our experience investing in EMs has shown us the difference that deep relationships with companies can make. Mutual trust and two-way communications often pave the way for us to partner with them in exploring and shaping improvements in ESG disclosures and other areas. All this work, if done well, could add up to a competitive advantage in spotting ESG advancers before the rest of the market has adequately priced in their prospects.


**ENDNOTES**
1. Source: Bloomberg. Latest data as of FY2020 (or, if unavailable, FY2019). Proprietary Bloomberg score based on the extent of a company’s ESG disclosure. Companies that are not covered by ESG group will have no score and will show N/A. Companies that do not disclose anything will show a value of ‘0.’ The score ranges from 0.1 for companies that disclose a minimum amount of ESG data to 100 for those that disclose every data point collected by Bloomberg. Each data point is weighted in terms of importance, with data such as Greenhouse Gas Emissions carrying greater weight than other disclosures. A consistent list of topics, data fields, and field weights apply across sectors and regions. This score measures the amount of ESG data a company reports publicly and does not measure the company’s performance on any data point. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges.

2. Source: Bloomberg. Data based on change from FY2017 to FY2020 (or, if unavailable, FY2019). Proprietary Bloomberg score based on the extent of a company’s ESG disclosure. Companies that are not covered by ESG group will have no score and will show N/A. Companies that do not disclose anything will show a value of ‘0.’ The score ranges from 0.1 for companies that disclose a minimum amount of ESG data to 100 for those that disclose every data point collected by Bloomberg. Each data point is weighted in terms of importance, with data such as Greenhouse Gas Emissions carrying greater weight than other disclosures. A consistent list of topics, data fields, and field weights apply across sectors and regions. This score measures the amount of ESG data a company reports publicly and does not measure the company’s performance on any data point. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges

3. Source: Sustainable Stock Exchanges Initiative (member list cross checked with current list of emerging market countries based on the MSCI EM Index), May 2021.

4. Source: Bloomberg, as of December 2020. Based on MSCI Emerging Markets Index. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges.

**What Are the Risks?**

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with investing in foreign securities, including risks associated with political and economic developments, trading practices, availability of information, limited markets and currency exchange rate fluctuations and policies; investments in emerging markets involve heightened risks related to the same factors. To the extent a strategy focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a strategy that invests in a wider variety of countries, regions, industries, sectors or investments. China may be subject to considerable degrees of economic, political and social instability. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks.

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.

There is no assurance any estimate, forecast or projection will be realized.

ESG Disclosures: Looking Beyond the Surface

medium_franklin templeton.jpg

small_franklin templeton.jpg

thumbnail_franklin templeton.jpg

franklin templeton.jpg

# Preview

Our definition of assets and their economic value has been changing over time. In the 20th century, machines, factories, and transportation were the assets on a company’s balance sheet. Today, value is dominated by intangibles. Brands, technologies, patents, copyrights, synergies, and business models determine the lion’s share of company worth. At this point, 90% of the capitalization of the S&P 500 Index is accounted for by intangibles(1), a huge jump from 36% in 1985.

This paper builds on the technological innovation and taxation themes presented in Deep Water Waves, a paper published by the Franklin Templeton Investment Institute, to explore the definition of intangible assets and draws conclusions on the implications for investors. Further, the paper dovetails with the Investment Institute’s Franklin Templeton Thinks Equity Markets piece, Growth or value? For active managers it can be both. All things considered, the evolving treatment of intangible assets may be one of the most impactful trends in the global economy, making them impossible to ignore.

Download Summary PDF [here](https://franklintempletonprod.widen.net/content/m7kl76qvqx/original/the-quiet-undertow-of-intangible-assets-summary-a.pdf)

Download Full PDF [here](https://franklintempletonprod.widen.net/content/btfdwsz34s/original/the-quiet-undertow-of-intangible-assets-a.pdf)

###### (1) Source: Analysis by Franklin Templeton Investment Institute, FactSet. As of 12/31/2020.

<br>

# Introduction

Our definition of assets and their economic value has been changing over time. In the 20th century, machines, factories, and transportation were the assets on a company’s balance sheet. Today, value is dominated by intangibles. Brands, technologies, patents, copyrights, synergies, and business models determine the lion’s share of company worth. At this point, 90% of the capitalization of the S&P 500 Index is accounted for by intangibles,(1) a huge jump from 36% in 1985. This paper builds on the technological innovation and taxation themes presented in Deep Water Waves, a paper (2) published by the Franklin Templeton Investment Institute, to explore the definition of intangible assets and draws conclusions on the implications for investors. Further, the paper dovetails with the Investment Institute’s Franklin Templeton Thinks Equity Markets piece, Growth or value? For active managers it can be both. (3) All things considered, the evolving treatment of intangible assets may be one of the most impactful trends in the global economy, making them impossible to ignore.

Below is a summary of the key points address in the full paper: 

- The rise of intangible assets has distorted the difference between value and growth investing. When balance sheets are adjusted for intangibles, “expensive” stocks
could appear to be “value” names. More intangible investments translate to higher, but uncertain, growth. Seemingly expensive companies with low profitability ratios and high intangible-intensity should not be automatically ruled out by true value strategies because, when a company proves the resilience of its business model, multiples can normalize.

- Thinking beyond the label of value and growth is critical. Passive portfolios with factor bets are now extremely vulnerable to changes of style categorization.

- Accounting standards have not kept pace and lead to inconsistent reporting and misclassification. Money spent on activities that create intangible assets is typically expensed, which leads to undercapitalization of intangibles and distorts traditional valuation metrics. This creates a widening valuation disparity between book value and market value. Solid and standardized environment, social and governance (ESG) frameworks will transform the way intangibles are captured on financial statements

- Intangible assets include brand and human capital which reflect how companies treat their people, communities, and the environment. Incorporation of wider
definitions of “quality” that include ESG factors will be critical in the newly emerging investment landscape.

- Further, current accounting practice may disincentivize management to make socially responsible investments, at a risk to environment, society, and the strategic position of their organizations.

- Many intangible-heavy firms will be affected by the ongoing international tax reform, e.g., around half the US tech names pay less than the proposed 15% minimum
global tax.(4)

- With the notable exceptions of South Korea and China, most emerging economies struggle to build strong research and development (R&D) networks. This tendency is unlikely to be reversed and constitutes a barrier to climbing the innovation ladder.

-  Collapsing antitrust enforcement can be seen as a prop for expansion of dominant companies. If successful, intangible investments can strengthen quasi-monopolistic
markets and concentration.

- The role of intangible assets will be enhanced in the future given progressing technological development, globalization, growing market sizes, the increasing role of
labor-intensive services, improving financial development, business friendly regulatory environment, and government support.

<br>

## IMPACTS ON VALUE AND GROWTH EQUITY CLASSIFICATIONS
Current accounting treatment’s failure to capture internally generated intangible assets has an impact on many topical themes. A better understanding of accounting nuances can shed light on the growth versus value debate. To put it simply, if intangibles are more fully considered, migrations of stocks between value and growth happen.

To illustrate our point, we adjusted the price-to-earnings multiple of the index representing growth stocks(5) by adding back our proxy of internally generated intangibles: 100% of R&D and 30% of selling, general and administrative (SG&A) expenses (see Research Methodology in Appendix of full paper). Interestingly, the adjustment makes the valuation of growth stocks look more in line with the standard valuation of the portfolio of value stocks.(6) While this is just preliminary analysis and further research will be needed, it highlights that incorporation of intangibles may significantly alter the current definitions of value and growth.

Active management strategies have been evolving and pure reliance on traditional accounting measures and their mean reverting properties is less common. Investors who require exposure to this traditional definition of value do it via indexing. Leading style indexes provide useful information about the relative performance of traditionally defined value and growth stocks and investment strategies based on such indexes can be profitable if executed nimbly. However, investors should be aware of the inherent limitations before making any investment decision.

<br>

## INTANGIBLES ARE A KEY ISSUE IN ONGOING GLOBAL TAX REFORM
2021 has brought some significant developments to international tax policy. The G7 (Group of Seven), a group of the world’s richest countries, agreed to make big multinational companies like Amazon, Meta Platforms FB and Google pay more tax in the countries where they are selling their products or services. The plan also backs a global minimum tax rate to limit tax competition between countries. Then, 130 OECD countries have also supported the initiative. Intangibles-heavy companies, or at least some of them(7) will undoubtedly be affected if the proposed changes come into effect. 

Intangible-intensity of multinational enterprises is a big part of the ongoing global tax reform. Intangible assets are easy to move around geographically. Hence, big companies can arbitrage differences in tax regimes. Increasingly, income from intangible sources has migrated to low-tax countries, allowing those companies to reduce their effective tax rates. 

<br>

## INTANGIBLE ASSETS ARE OFTEN STRONGLY CONNECTED WITH ESG GOALS

Intangible assets include brand and human capital, which reflect how companies treat their people, communities, and the environment, and how a company achieves its ESG investment goals. The shift towards an era of intellectual property makes the incorporation of relevant ESG factors crucial to the evaluation of a company.

Consumer and institutional investors’ preferences are evolving. The asset management industry needs to respond to this demand. Consequently, the prominence of sustainability-oriented investment has been accelerating over the last decade. In 2020, global sustainable investments reached more than US$35 trillion. Exhibit 12 portrays the growth of sustainable assets in five major regions. Growth has been steady everywhere but in. 

Predictably, growing intangible-intensity correlates with the widening adoption of ESG, as ESG can fill the value creation gap in financial reporting. Increased focus on the formation of intangible assets through ESG investments can improve the informational usefulness of sustainability reports. Further, the ESG value proposition can eventually transform a financial reporting system so that more intangibles are captured in financial statements.

Given the evolving macroeconomic backdrop and long-term investment drivers, companies will be under pressure to change at almost every level. Those that are good corporate citizens are already better placed for the changing consumer and investor preferences. 

The adoption of a wider definition of ‘quality’ that includes ESG factors will be critical in the newly emerging investment landscape.(8) Markets have been adopting socially responsible criteria which have largely benefited investors. However, accounting practices have not kept pace. A more readily implementable and standardized ESG framework is needed to further motivate companies to make responsible strategic decisions and to fill the value creation gap in financial reporting.

###### Endnotes
###### 1. Source: Analysis by Franklin Templeton Investment Institute, Factset. As of 12/31/2020.
###### 2. Source: as of September 2021, Franklin Templeton Investment Institute, Deep water waves.
###### 3. Source: See our paper, “Growth of Value? For active managers it can be both,” November 2021. Chief Market Strategist Stephen Dover is joined by five of our equity teams—each by one of our independent investment managers—offering their views that the traditional growth or value distinction for stocks based on index construction could be misleading, including the role intangibles may play in valuation processes.
###### 4. Source: Analysis by Franklin Templeton Investment Institute, Factset. As of 5/31/2021. The analysis is based on the constituents of the S&P 500 Information Technology Index and their effective tax rates for the last calendar year.
###### 5. Source: The MSCI USA Growth Index. Indexes are unmanaged, and one cannot invest directly in an index. They do not include fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com.
###### 6. Source: The MSCI USA Value Index. Indexes are unmanaged, and one cannot invest directly in an index. They do not include fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com.
###### 7. Precise analysis of winners and losers will be possible when the final shape of the deal is known. It may be hard to avoid loopholes. The current OECD framework sets profitability threshold percentage to 10%. For example, Amazon with its business model that depresses profitability ratios (6.3% pre-tax margin in 2020) can be let off the hook.
###### 8. Source: Kim Catechis, Franklin Templeton Investment Institute, Deep Water Waves, August 2021

###### **WHAT ARE THE RISKS?**
###### **All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.** The positioning of a specific portfolio may differ from the information presented herein due to various factors, including, but not limited to, allocations from the core portfolio and specific investment objectives, guidelines, strategy and restrictions of a portfolio. There is no assurance any forecast, projection or estimate will be realized. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors actors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Derivatives, including currency management strategies, involve costs and can create economic leverage in a portfolio which may result in significant volatility and cause the portfolio to participate in losses (as well as enable gains) on an amount that exceeds the portfolio’s initial investment. A strategy may not achieve the anticipated benefits, and may realize losses, when a counterparty fails to perform as promised. Currency rates may fluctuate significantly over short periods of time and can reduce returns. Investing in the natural resources sector involves special risks, including increased susceptibility to adverse economic and regulatory developments affecting the sector—prices of such securities can be volatile, particularly over the short term. 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. Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

###### **IMPORTANT LEGAL INFORMATION**
###### This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton. The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of the publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the fi rm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal. Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verifi ed, validated or audited such data. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction. Issued in the U.S. by Franklin Distributors, LLC, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com - Franklin Distributors, LLC, member FINRA/SIPC, is the principal distributor of Franklin Templeton U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.

Deep Waves: The Quiet Undertow of Intangible Assets

large_LIT banner.jpg

medium_LIT banner.jpg

small_LIT banner.jpg

thumbnail_LIT banner.jpg

LIT banner.jpg

# About the Initative

Let’s Invest Together! (LIT!) is the culmination of significant cross-industry effort, with IMAS’ Gamification workgroup, collaborating with MoneySense, CPF Board, and the SGX Group, to accelerate Optimai, our fintech partner discovered through the IMAS Digital Accelerator Program (DAP). By leveraging on technology, and the mechanics of gamification, we have created a prototype of a fast-moving investment education game, available on iOS and Playstore, readily accessible to the investing public. 


<iframe width="560" height="315" src="https://www.youtube.com/embed/TRBCZukn7yo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

Given the evolution of the investor base, many of whom have become more digitally savvy, the IMAS Education Committee saw the opportunity in 2020 to leverage on gaming technology and the IMAS DAP to create a fun and exciting utility to help build investment knowledge amongst the investing community.

Utilising real data to simulate actual events, the game is uniquely able to help investors better understand how the various asset class interact, their risk profile and how their investment decisions can impact their portfolios, thereby improve their ability to asset allocate and build resilient investment portfolio for themselves.

##### Download the game now:

1. [Google Playstore](https://play.google.com/store/apps/details?id=com.Optimai.LetsInvestTogether)
2. [Apple Store](https://apps.apple.com/app/lets-invest-together/id1576667625)

Let's Invest Together! (LIT!)

If your main objective is to grow your money, investing can be a great alternative to using a savings account. By investing, your aim is to grow your wealth in real terms over time. To learn more about what kind of investor you are and to find out more on investing, take our investIQ test here: www.schroders.com/investIQ

Schroders investIQ: Investing in a nutshell

large_Amundi article (1).jpg

medium_Amundi article (1).jpg

small_Amundi article (1).jpg

thumbnail_Amundi article (1).jpg

Amundi article (1).jpg

**‘Bad’ stocks: Is excluding companies the only way forward?**

One of the most typical strategies of responsible investing is to simply avoid companies that are not harming the environment or society. 

Some stocks are generally excluded from portfolios, such as controversial weapons or more recently tobacco, but exclusions alone do not bring a significant impact on the world.  
Sometimes, companies with a low sustainable rating might have more room for growth and improvement in the long term so it’s important for investors to remain diversified and consider each company and approach individually. 

For example, some oil or fossil fuel polluters have stepped up their games and are now making big advances in the renewable space.  

Some of the largest and profitable energy firms, such as BP are showing improvement in their sustainability efforts, such as reducing their CO2 emissions and showing their progress towards a lower carbon footprint in a more transparent way. 

This is one of the reasons why some investors, like Amundi, are against excluding or divesting from some companies with historically poor ESG performance. Amundi is part of an approach to support, not exclude, these companies, in order to encourage them  to improve and change their practices. 

‘The objectives are that the biggest number of companies are changing their business models in order to make the climate a place where we can move on. They have the incentives to adapt. We believe in this best-in-class approach for investment, combined with an ongoing dialogue and engagement with issuers,’ says Elodie Laugel, chief responsible investment officer at Amundi. 
So, to what extent should investors focus on exclusion when it comes to responsible investing? 
Exclusion remains a powerful sanction, but is not without its drawbacks. ‘To make a difference, you cannot just exclude [companies], because if you exclude, you give up the ability to influence the company’s behaviour in the future you don’t engage,’ says Vincent Mortier, group deputy CIO at Amundi.  

This means that Amundi will underweight a certain firm it considers as a laggard, but it will still engage with it to trigger change.  

A best in class approach is also necessary to ensure proper portfolio diversification [1], added Mortier. 

In fact, responsible investing and environmental, social and governance (ESG) has become one of the best signals for determining stocks and their value.  

As more people became interested in responsible investing, they have tended to focus on the best ESG stocks (such as those linked to climate change), which has increased their appeal. Outperformance has also depended on trends or certain factors being addressed properly, but overall it is proven that companies doing their homework on their responsibilities on the environment, society and governance perform better than those who do not, Amundi explains. 

‘Prior to 2014, there was no clear outperformance from ESG investing. A break happened in 2014, with growing investor mobilization across equity and debt markets: ESG investing became a source of outperformance since 2014 in Europe and North America,’ Mortier says. 

Amundi excludes companies involved in anti-personnel mines, cluster munitions, as well as chemical and biological weapons. In addition, Amundi implements specific and targeted sectoral exclusion policies for coal and tobacco in its active funds (see graph).

![amundi article.jpg](/uploads/amundi_article_cbc09f544c.jpg)

* Exclusion policy as of 31st December, 2020.

Sources:[1] Diversification does not guarantee a profit or protect against a loss

IMPORTANT INFORMATION  
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 1 December 2020. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability. 

Date of first use: 10 January 2021 


‘Bad’ stocks: Is excluding companies the only way forward?

large_fullterton rethinking retirement.JPG

medium_fullterton rethinking retirement.JPG

small_fullterton rethinking retirement.JPG

thumbnail_fullterton rethinking retirement.JPG

fullterton rethinking retirement.JPG

The COVID-19 pandemic has impacted all aspects of people’s lives, disrupting schedules and changing plans. Like many others around the world, Singaporeans have had to embrace a different normal. This pandemic has also led many to re-evaluate their long-term plans, creating an impetus to think about retirement.

To understand the pulse of the nation, Fullerton Fund Management surveyed Singaporeans to better understand their evolving aspirations, expectations, and priorities when it comes to financial management and retirement planning.

Four key findings stood out when examining Singaporeans’ changing habits, perceptions, and attitudes in a post-pandemic world:

- Singaporeans are re-defining the whole idea of retirement and how to get there 
- COVID-19 pandemic has triggered Singaporeans to plan for the future
- Understanding of risk and return is evolving; Singaporeans look to investment to generate retirement income
- Growing importance of digital tools

For more insights, please download the report: http://imas.org.sg/public/media/2021/06/30/2000_Rethinking_Retirement.pdf

Rethinking Retirement: How digital technologies and COVID-19 are reshaping the way Singaporeans approach retirement

large_1440x770asiAWomansplace.jpg

medium_1440x770asiAWomansplace.jpg

small_1440x770asiAWomansplace.jpg

thumbnail_1440x770asiAWomansplace.jpg

1440x770asiAWomansplace.jpg

Covid-19 has inflicted disproportionate hardship on women, widening the already yawning gap in gender inequality. But as well as the issue of social justice, there are powerful economic reasons for increasing diversity and inclusivity in the workforce.

It’s no secret women have borne the brunt of the fallout from Covid. Lockdowns have hit hardest at low-paid service-sector jobs typically filled by women. At the same time, women’s unpaid caring responsibilities have increased with home schooling and home working.

But as well as the issue of fairness, there’s a powerful efficiency argument for gender equality in the workplace. Increasing diversity and inclusivity in the workforce can lift incomes and growth. With populations ageing and productivity growth falling, corporate and government policy encouraging female participation in the workforce could provide a much-needed shot in the arm for the global economy.

For a start, gender differences in the workforce underscore the poor return on investment in education. Women are generally as well-educated as their male counterparts in most developed countries, or more so. Yet, they’re far more likely than men to face a trade-off between accepting paid work and taking unpaid work, including caring responsibilities. Consequently, women are less attached to the workforce. And, when they do work, they do fewer hours, fuelling the gender gaps in pay, progress and opportunities.

Our research sets out to understand what drives female participation in the workforce. We analysed data for 31 countries from 2002 to 2016. Our findings suggest five clear actions for policymakers and companies wanting to lift female participation.

1. Ensure men have access to paternity leave so the burden of child-related career breaks is more evenly shared.

The most striking finding is that higher legislated paternity-leave entitlements are significantly and positively associated with higher rates of female labour-force participation. A one-week increase in paternity leave on average increases female participation by around 3%. The benefits seem to peak at about seven weeks but continue to have net positive effects for many months thereafter.

This make sense. If women expect to take career breaks while their partners don’t, this naturally creates less attachment to the labour force. An employer considering two candidates of different genders may favour the person least likely to leave. If all parents expect to take leave, these barriers to women entering and remaining in the workforce should decline.

But higher paternity leave entitlements are only part of the solution. Men still show unswerving reluctance to take paternity leave - we must do more to incentivise men to take their entitlements.

2. Reduce tax penalties for second earners and sole parents

Women tend to be the second earners in dual-income households and are more likely than men to be single parents. Some countries impose higher taxes on second earners and sole parents, discouraging female participation. Governments should reform tax systems to level the playing field.

3. Consider both quantity and quality of female work

Many women have to juggle work with caring responsibilities. So, part-time work and flexible, short-term employment are crucial in keeping women connected to the workforce, especially during early parenthood.

For women in regular work, we found a positive relationship between employment protections and female participation. But, for temporary contracts, the opposite held – weaker protections were associated with higher levels of female participation. This suggests workplace flexibility allows easier entry and re-entry for women. Companies must find a balance between protections and providing the flexibility parents and caregivers need.

4. Strengthen performance and resilience of the overall economy

We found three economic factors closely and positively linked with female workforce participation: countries’ economic output; education; and male labour-force participation. The findings reinforce the importance of sound economic policy aimed at steady, long-term growth. As the deep recessions caused by Covid have shown, women are more likely than men to be forced from the workplace in times of economic strife.

5. Report more and higher-quality data

Finally, there’s a sparsity of good-quality, company-level data on diversity and inclusion policies. Existing legislation needs to be strengthened and expanded in scope. Without adequate information, we can’t fully understand what works in terms of improving diversity and inclusion, and how that affects corporate performance.

Implications for investors

Our research has important implications for investors. The findings can help identify countries best-positioned to boost female participation, enhance economic efficiency and tackle long-term growth challenges. The work also highlights the importance of social factors in influencing long-term economic and, hence, market outcomes. This is particularly relevant as environmental, social and governance (ESG) issues become increasingly central to investment approaches. The study gives further weight to the often underestimated ‘S’ in ESG risks and opportunities, particularly for investors with long-term strategic investment horizons.

Chart 1: Factors that influence female labour-force participation rates (LFPR)

![aberdeen gender chart.JPG](/uploads/aberdeen_gender_chart_0fa73bc4d4.JPG)


 
Source: Barro&Lee, Maddison Project, OECD, Prospered Project, World Bank, ASIRI (as of 2016)

A woman's place: gender equality in the workplace benefits all

small_FTSG_CAROL_IMG_0321_01.png

thumbnail_FTSG_CAROL_IMG_0321_01.png

FTSG_CAROL_IMG_0321_01.png

Investors today are navigating uncharted waters, amidst market volatility in a pandemic world, and such uncertainties tend to result in emotions running high.

However, investors need to understand that market volatility is part of investing, and learn how to live with it. Market downturns may happen frequently, but they don’t last forever

To be able to navigate volatility and potentially emerge unscathed, it is important that investors keep three strategies in mind:

**Stay Calm**

Keep a long-term perspective and tune out the noise.

**Diversification Matters**

Diversification may reduce overall volatility and provide a smoother ride through bumpy markets.

**Remember Your Strategy**

While it may be tempting to pull out of the stock market during volatility, it is important to stick with an investment strategy.

**Navigating Market Volatility.**

When markets are choppy, it is natural for emotions to run high.
![FTSG_CAROL_IMG_0321_01.png](/uploads/FTSG_CAROL_IMG_0321_01_fda7631869.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. Source: © Morningstar 2021. Franklin Templeton Capital Market Insights Group. Average annual return from 12/31/2010-12/31/2020. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.*

**Market downturns don't last forever.**

Investors need to understand that market volatility is part of investing.
![FTSG_CAROL_IMG_0321_02 (1).png](/uploads/FTSG_CAROL_IMG_0321_02_1_615ae2da91.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results.
Source: © Morningstar 2021, Standard and Poor’s. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.*

**What can help investors?**

Let’s look at three strategies that can help investors live with market volatility.

![FTSG_CAROL_IMG_0321_03.png](/uploads/FTSG_CAROL_IMG_0321_03_c665280015.png)

**Stay Calm.**

First and arguably the most important concept of investing is to keep a long-term perspective.

![FTSG_CAROL_IMG_0321_04.png](/uploads/FTSG_CAROL_IMG_0321_04_9b0f5e0ec8.png)

**Acting on fear may divert investors from their long-term goals.**

When faced with volatility, acting on fear and pulling money out of the market may divert investors from their long-term goals. While past performance cannot guarantee future results, keeping a long-term perspective can help during times of volatility.

![FTSG_CAROL_IMG_0321_05.png](/uploads/FTSG_CAROL_IMG_0321_05_4e1c0405ae.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. Source: © Morningstar 2021. Franklin Templeton Capital Market Insights Group. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.*

**Tune Out the Noise.**

The perception of a portfolio would change depending on the monitoring period. A way for investors to stay calm and not act on emotions is to watch their portfolio less.

![FTSG_CAROL_IMG_0321_06.png](/uploads/FTSG_CAROL_IMG_0321_06_a28b32f282.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. Source: © Morningstar 2021, Macrobond. S&P 500. Analysis by Franklin Templeton Capital Group. Monitoring periods are represented by 10-year, 5-year, 3-year, 1-Year, monthly rolling periods for S&P 500 Index from 12/31/70–12/31/2020. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.*

**Diversification Matters.**

Diversification is a staple of investing and may reduce a portfolio’s overall volatility and provide a smoother ride through bumpy markets.

![FTSG_CAROL_IMG_0321_07.png](/uploads/FTSG_CAROL_IMG_0321_07_79dcb35758.png)

**As markets change, your portfolio may need to evolve.**

This chart shows how various asset classes performed on a year-by-year basis over the last 15 years. No asset class has consistently offered the best return year in and year out, so investors need to have a diversified asset allocation plan.

![FTSG_CAROL_IMG_0321_08.png](/uploads/FTSG_CAROL_IMG_0321_08_f850d0197d.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. Source: © Morningstar 2020. Larger growth stocks are represented by the S&P Growth Index; Large value stocks are represented by the S&P 500 Value Index; Small growth stocks are represented by the Russell 2000 Growth Index; Small Value stocks are represented by the Russell 2000 Value Index; Foreign stocks are represented by the MSCI EAFE Index; Bonds are represented by the Bloom berg Barclays U.S. Aggregate Index; High yield bonds are represented by the Credit Suisse High Yield Index; Emerging market stocks are represented by the MSCI Emerging Markets Index; Global bonds are represented by the FTSE World Government Bond Indexes; Hedge Strategies are represented by the HFRX Global Hedge Index. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges. Diversification does not guarantee a profit or a protect against loss.*

**Why Diversify? Because Winners Rotate.**

Keeping assets properly allocated across several asset classes helps reduce overall volatility and improves your chances to earn more consistent returns over time. This chart shows how the strategy that allocates investments across several asset classes performs relatively better.

![FTSG_CAROL_IMG_0321_09.png](/uploads/FTSG_CAROL_IMG_0321_09_6f018651d6.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. *Annual investments are made into the best performing asset class index of the previous 12-month period. **Annual investments are made into the worst performing Index of the previous 12-month period. ***Annual investments are evenly distributed across all asset class indexes each year and rebalanced annually. Source: © Morningstar 2020. The three scenarios include large growth stocks, represented by the S&P Growth Index; large value stocks, represented by the S&P 500 Value Index; small growth stocks, represented by the Russell 2000 Growth Index; Small Value stocks, represented by the Russell 2000 Value Index; foreign stocks, represented by the MSCI EAFE Index; bonds, represented by the Bloomberg Barclays U.S. Aggregate Index; high yield bonds, represented by the Credit Suisse High Yield Index; emerging market stocks, represented by the MSCI Emerging Markets Index; global bonds, represented by the FTSE World Government Bond Indexes; hedge strategies, represented by the HFRI Fund Weighted Composite Index. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. Diversification does not guarantee a profit or a protect against loss. Indexes are unmanaged and one cannot invest in them. They do not include fees, expenses or sales charges.*

**Remember your investment strategy.**

Review that plan when emotions are running high.

![FTSG_CAROL_IMG_0321_10.png](/uploads/FTSG_CAROL_IMG_0321_10_9a0d61558c.png)

**Dollar Cost Averaging can make it easier to cope with volatility.** 

As markets move up and down, so will the cost of your investment. Committing a fixed amount of money at regular intervals to an investment, a.k.a dollar cost averaging, can help reduce anxiety about the investment process.

![FTSG_CAROL_IMG_0321_11.png](/uploads/FTSG_CAROL_IMG_0321_11_23bdfd20df.png)

*This chart is for illustrative purposes only. Dollar cost Averaging does not assure a profit or protect against loss in declining markets. Investors should consider their ability to make regular investments during all market conditions.*

**Don't time the market.**

This chart shows the 20 worst trading days and the 20 best trading days of the S&P 500 index over the last 20 years. In many cases the best trading day immediately follows the worst trading day illustrating how difficult it is to attempt to time the market.

![FTSG_CAROL_IMG_0321_12.png](/uploads/FTSG_CAROL_IMG_0321_12_9b84d4727e.png)

*This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund. Past performance does not guarantee future results. Source: © Morningstar 2021. S&P 500. Based on returns in local currency over a 20-year period ended 9/30/2020. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.*

**Jumping In and Out of the Market Can be Costly.**

Just as many investors are slow to recognize a retreating stock market, many also fail to see an upward trend in the market until after they have missed opportunities for gains. An investor who stayed fully invested and didn’t miss any of the best days would have earned a significantly higher return than those who missed the best days.

![FTSG_CAROL_IMG_0321_13.png](/uploads/FTSG_CAROL_IMG_0321_13_8bfd6ef335.png)

**Key Takeaways**

1. Markets have tended to reward patient investors over long periods of time.

2. Emotions affect decision-making ability.

3. Stay calm, diversification matters, and remember your strategy.

![FTSG_CAROL_IMG_0321_14.png](/uploads/FTSG_CAROL_IMG_0321_14_d907b26eb1.png)



How to Navigate Market Volatility

small_FTSG_CRTF_CAROL_IMG_0321_L1_01.png

thumbnail_FTSG_CRTF_CAROL_IMG_0321_L1_01.png

FTSG_CRTF_CAROL_IMG_0321_L1_01.png

Everyone has different financial goals, with varied time horizons, and there are plenty of investment products out there that aim to help you achieve your goals. Choosing the right type of investment product or fund for each goal is crucial, and there are important considerations for you to think about. In this section, learn more about how to choose the right type of fund for each of your goals.

**Choosing the Right Type of Mutual Fund**

There are many different types of mutual funds, and it is important to choose the right ones that meet your various investment objectives.

![FTSG_CRTF_CAROL_IMG_0321_L1_01.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_01_85766e90b6.png)

**Making Financial Decisions in Life**

Life has many expenses and financial decisions in store for you – big and small decisions, urgent expenses and not so urgent ones.

![FTSG_CRTF_CAROL_IMG_0321_L1_02.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_02_41158734b5.png)

**Setting Financial Goals and Time Horizons**

There are different types of financial goals with varying time horizons, and various investment products, such as mutual funds, are available to help you achieve them. When setting them, it is important for each goal to be specific, achievable and measurable.

![FTSG_CRTF_CAROL_IMG_0321_L1_03.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_03_475a9ec6c8.png)

**Matching Financial Goals with Investments**

Goals-based investing is crucial if you wish to stay on track to achieve your goals. It involves having a customized plan and choosing specific products that may have the best chance of meeting each particular goal.

![FTSG_CRTF_CAROL_IMG_0321_L1_04.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_04_43888a4f3a.png)

**Creating an Investing Roadmap**

You can also categorize your goals in order of priority, ie on a scale from the important and urgent goals (financing a house), to not-so-urgent ones (buying a new car), to distant future goals (funding your desired retirement lifestyle).

![FTSG_CRTF_CAROL_IMG_0321_L1_05.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_05_f62972e40a.png)

**Allocation of Funds Based on Priority of Goals**

You should first allocate funds for the important and urgent goals, and then for the others once the high priority goals are covered.

![FTSG_CRTF_CAROL_IMG_0321_L1_06.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_06_28d4b4a7fc.png)

**Types of Investment Plans**

You can also choose between investing lump sum amounts or starting a systematic investment plan. Lump sum investing involves investing a single sum of money at one go. A systematic investment plan (SIP) involves contributing regular, fixed and often-small amounts into an investment product, like a mutual fund.

![FTSG_CRTF_CAROL_IMG_0321_L1_07.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_07_764546350c.png)

**Buying a House**

Let's focus on an important financial goal for everyone – buying a house and ensuring you can afford the mortgage payments comfortably.

![FTSG_CRTF_CAROL_IMG_0321_L1_08.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_08_82e3dd1dfb.png)

**Buying a House - Types of Funds to Consider**

This goal requires a steady growth of investments meeting their long-term accumulation goals. In this situation, you could consider investing in equity funds. Depending on your risk appetite, there’s a wide range of equity funds to choose from, like large, mid, small-cap as well as sector funds.

![FTSG_CRTF_CAROL_IMG_0321_L1_09.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_09_75b18e1162.png)

**Planning for Retirement**

Now fast forward to your retirement. You would want regular, passive income from your investments to fund living expenses, which may come from long-term bond funds.

![FTSG_CRTF_CAROL_IMG_0321_L1_10.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_10_1766559b6e.png)

**Ongoing Assessment, Monitoring and Tracking**

There is an endless number of scenarios and your circumstances and priorities can also change over time, as life is dynamic and ever-changing. It is important to continuously assess, monitor and track your progress towards your goals.

![FTSG_CRTF_CAROL_IMG_0321_L1_12.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_12_76720a03b3.png)

**Mutual Funds - One Stop Solution**

Mutual funds can be a one-stop simple solution for all your various investment goals. Choosing the right type of fund involves understanding a fund’s investment strategy, style, objective and risk profile, which then offers invaluable insights into the role it can play in your goals-based investing journey.

![FTSG_CRTF_CAROL_IMG_0321_L1_13.png](/uploads/FTSG_CRTF_CAROL_IMG_0321_L1_13_ebb1955a60.png)
















How to choose the right type of fund

large_esg-essentials-brochure-4_Page_1.jpg

medium_esg-essentials-brochure-4_Page_1.jpg

small_esg-essentials-brochure-4_Page_1.jpg

thumbnail_esg-essentials-brochure-4_Page_1.jpg

esg-essentials-brochure-4_Page_1.jpg

![esg-essentials-brochure-4_Page_1.jpg](/uploads/esg_essentials_brochure_4_Page_1_c9c9981847.jpg)
![esg-essentials-brochure-4_Page_2.jpg](/uploads/esg_essentials_brochure_4_Page_2_5192c6ae47.jpg)
![esg-essentials-brochure-4_Page_3.jpg](/uploads/esg_essentials_brochure_4_Page_3_8f839997ee.jpg)
![esg-essentials-brochure-4_Page_5.jpg](/uploads/esg_essentials_brochure_4_Page_5_06ddfbc3d8.jpg)
![esg-essentials-brochure-4_Page_6.jpg](/uploads/esg_essentials_brochure_4_Page_6_91c80af5c6.jpg)
![esg-essentials-brochure-4_Page_7.jpg](/uploads/esg_essentials_brochure_4_Page_7_e22f0a8e18.jpg)
![esg-essentials-brochure-4_Page_8.jpg](/uploads/esg_essentials_brochure_4_Page_8_7ccbd72ca6.jpg)
![esg-essentials-brochure-4_Page_9.jpg](/uploads/esg_essentials_brochure_4_Page_9_c8a455b625.jpg)



ESG Essentials Brochure 4: A perspective on responsible investment trends

A joint initiative of IMAS and LIA