Michael Aked

Credit Suisse Wealth Management has announced that Michael Aked has joined the discretionary portfolio management team as Director, Senior Investment Manager.

Michael will play a critical role in the team, and take responsibility for top-down risk allocation, portfolio design and the optimisation of client portfolios.

He brings to both the Australian and wider Credit Suisse Wealth Management teams, extensive international experience, having held positions in Sydney, Tokyo, Chicago, California, London and Zurich. This will help us ensure that we continue to effectively bring together UBS and Credit Suisse’s global capabilities to meet local client needs.

Further enhancing our institutional grade offering, Michael’s appointment is also fundamental in aligning the wealth and ESG goals of our clients.

Michael was most recently a Senior Investment Strategist at Scientific Beta, where he engaged with Superannuation Funds on ESG and Factor-based related investment strategies. His previous roles also include Head of Australia Research at Research Affiliates, and Head of Asset Allocation for UBS Asset Management, driving performance across multi-asset class portfolios in Sydney, Tokyo, and Zurich.

Michael holds a Masters in Mathematical Finance from the University of Chicago and a Masters in Statistics from the University of Virginia.

Michael will report to Jasmin Argyrou, Head of Discretionary Portfolio Management for Australia at Credit Suisse Wealth Management.

The post Michael Aked appointed as Senior Investment Manager, Credit Suisse Wealth Management appeared first on AdviserVoice.

Michael Aked

Scientific Beta, an equity index provider in the ESG and Multi-Factor investment arena, has challenged the conventional belief that investing in companies or portfolios with high ESG green scores guarantees excess returns or even significant climate impact.

The international index provider has brought its knowledge from Europe to Australia and says that on the surface, ESG portfolios may indicate outperformance, but they’re not moving the dial on achieving climate goals.

Since 2015, Scientific Beta has been providing cutting-edge strategies in the realms of ESG and climate change. In addition to its in-house research efforts, Scientific Beta actively backs a significant research endeavour led by EDHEC focused on ESG and climate investing.​

During this period, Scientific Beta has developed three principles of climate impact investing anchored on the fact that green alpha is an illusion, directly challenging the damaging status quo that you can save the planet and deliver higher returns for investors.

Michael Aked, senior investment strategist at Scientific Beta, stated the firm is a strong supporter of ESG investing given its European roots but warns that the science behind green alpha is not robust and fraught with data mining. Mike agrees that it will not lower investors’ returns either.

“Many investors have been led to believe that green portfolios will lead to greater investment returns. This runs the risk that investors will be held hostage to ways and means of investment managers. We suggest investors outline their impact objective first and then require investment managers to deliver traditional investment returns within the investor’s impact targets,” explained Mr. Aked.

Aked believes there are three principles investors should follow when it comes to climate impact investing:

• maximise your impact objectives – understand the motivations and language for low-carbon investing and find the balance between company engagement and divestment
• green alpha is just an illusion – assess your value-added when accounting for sector exposures, downside risk and trends or shifts, and
• don’t let your impact be greenwashed away – evaluate whether your portfolio sends clear messages to company decision-makers.

“To realign key sectors with climate goals, we need to allocate capital selectively within and across sectors, championing climate change leaders and incentivising progress,” Mr. Aked concluded.

The post Scientific Beta shatters “green alpha” illusion appeared first on AdviserVoice.

Michael Aked

Scientific Beta, a trailblazer in managing net zero portfolios in Europe, is now collaborating with superannuation funds to extend its expertise to the Australian market. This objective is to empower Australian super funds with the tools and knowledge required to effectively navigate the complexities of decarbonising their portfolios while adhering to the demanding Your Future, Your Super (YFYS) regulations – a multi-faceted and urgent endeavour.

Superannuation funds in Australia, including some of the nation’s largest, have made ambitious commitments to align their investments with net zero objectives. In Europe, the regulator has clear rules that must be fulfilled if an investor is going to claim such lofty net zero goals, best embodied in the EU Carbon Transition Benchmark regulatory framework. The core commitment of the European framework requires an annual reduction in the carbon intensity of pension funds’ equity portfolios of 7%, a goal that presently appears challenging for Australian superannuation funds to attain. Many of these funds continue to allocate significant portions of their members’ funds to high-carbon Australian and international companies without making clear to these companies if they do not decarbonise fast enough then divestment must be the repercussion.

Michael Aked, Senior Investment Strategist at Scientific Beta, stated that the EU CTB framework is being adopted by many investors around the world including in New Zealand.​

Mr. Aked emphasised the predicament that super funds find themselves in due to their strict adherence to Your Future, Your Super (YFYS) performance testing.​

“Super funds are essentially walking a tightrope. YFYS performance testing imposes tracking error targets that tether them to high-emitting Australian companies, hindering their ability to achieve both satisfactory returns and an acceptable rate of decarbonisation,” explained Mr. Aked.

One unintended consequence of YFYS regulations is to restrict fund investment behaviour to continue to fund high carbon emitters regardless of their ESG performance.

Unlike Europe, where low-carbon benchmarks are readily available, the absence of a YFYS-compliant low-carbon benchmark in Australia leaves super funds with few viable options. Mr. Aked outlined two paths available to super funds:

• Comply with YFYS: Fulfil their YFYS obligations but risk allegations of greenwashing for making net zero commitments they may not fulfil.
• Pursue net zero commitments: Invest in line with their net zero commitments but prepare for potential repercussions if they fail the YFYS performance test, which could lead to significant regulatory action.

“This presents an exceedingly challenging scenario for super funds, as both options expose them to regulatory scrutiny, jeopardising members’ funds and eroding trust,” Mr. Aked emphasised.

Scientific Beta recommends a proactive approach to navigate this dilemma. According to Mr. Aked, the optimal solution is for super funds to publicly commit to a 7% annual decarbonisation targets that requires forced divestment of carbon laggards. Only if Australian companies risk losing capital from our super funds will they see the importance of acting annually and with the required magnitude to meet net zero 2050 goals.

“In essence, super funds can opt to stay the course and employ the coercive power of forced divestment to compel companies to meet their decarbonisation targets, thereby driving meaningful change,” Mr. Aked concluded.

“Scientific Beta’s established track record in Europe positions us to provide invaluable guidance to Australian superannuation funds grappling with the challenges of net zero portfolio management. Our expertise will prove instrumental in assisting them on this critical journey.”​

The post Australian superannuation funds confront critical dilemma: Balancing YFYS compliance with greenwashing risks in pursuit of 2050 emission goals appeared first on AdviserVoice.