A New Way to Lower Risk?

ESG investments have strong potential for mitigating risk by providing earnings stability. Highly rated ESG companies may not only benefit society—they may benefit your portfolio too.
  
  • Companies with the highest environmental, social, and governance (ESG) scores generated the lowest future increases in earnings per share (EPS) volatility during five-year periods. (See chart).
  • Earnings stability matters. Throughout the 10-year period ended 2015, companies with high ESG scores also experienced smaller price declines than other equities.1
  • ESG companies vary widely on their individual environmental, social, and governance scores; an active approach to investing in a portfolio of ESG firms may be advantageous to many investors.


1Bank of America Merrill Lynch (2016) “ESG: good companies can make good stocks.” Equity Strategy Focus Point. 

The views expressed are the views of Fred Alger Management, Inc. as of June 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. . 

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