The Next ESG Hot Spot: India? | Chief Investment Officer

Investors using environmental, sustainable, and governance-based (ESG) screens in India would have outperformed their peers in all types of economic cycles, two academics have claimed.

In a paper examining the performance of the Indian stock market, Vanita Tripathi and Varun Bhandari, from the Delhi School of Economics, found companies that had adopted ESG principles outperformed the rest of the index.

“Regulators, policy makers, and mutual funds should make available SRI products to initiate the movement of socially responsible investing in India.” —Tripathi and Bhandari“It is found that socially responsible stocks portfolios generated significantly higher returns than other portfolios, whether it is boom or recession,” the paper said.

The pair used various risk-adjusted measures, including Sharpe ratios and the Fama-French three factor model for estimating and assessing returns.

For more stories like this, sign up for the CIO Alert newsletter. 

“The result of Fama’s decomposition measure demonstrates that socially responsible portfolios outpaced other portfolios, even on the basis of net selectivity return during boom and recessionary periods,” the paper said.

The Indian Prime Minister, Narendra Modi, was ushered into parliament last year after running an election campaign that promised to rid the country of deep-seated corruption. The authors of this paper urged those in charge to go even further and help attract more investment to the region.

“We suggest that regulators, policy makers, and mutual funds should construct and make available various socially responsible investment products to initiate the movement of socially responsible investing in India,” the paper said. “The policy makers can also push financial sector reforms in the direction of SRI to enforce corporate and social responsibility law.”

The full paper is available for download.

AIG is on the hunt for a CIO to oversee a portfolio of $357 billion in insurance assets.

The new investment chief would take on overall asset management responsibilities from Executive Vice President William Dooley, who has been with the firm since 1978, a spokesperson confirmed.

The CIO position has been vacant since 2013 when former Global Head of Asset Management Monika Machon was named treasurer for the insurance giant. During her 4-year tenure, she was responsible for all AIG insurance assets and led a multinational team of 175 investment professionals.

In her place, AIG appointed Executive Vice President Brian Schreiber and North American CIO Geoffrey Cornell as deputy CIOs, both reporting to Dooley.

For more stories like this, sign up for the CIO Alert newsletter. 

Since 2013, Schreiber has been managing a $200 billion portfolio of private placements, direct investments, real estate, private equity, structured products, and hedge funds.

In May 2015, Schreiber was named chief strategy officer, tasked with managing all of AIG’s global strategic planning, M&A and divestitures, communications, and investor relations.

Cornell, on the other hand, is responsible for developing asset allocation and managing portfolios for AIG’s property casualty funds.

AIG’s funds are primarily set up to generate investment income, preserve capital, manage liquidity, and gain surplus to support its insurance products. The majority of AIG’s assets backing liabilities are intermediate and long duration fixed income, the spokesperson added.

The hunt for a CIO is the latest part of CEO Peter Hancock’s reshaping of AIG’s management. Since his appointment in September 2014, he has split the company into two divisions: one for commercial clients and the other for consumer operations.