Despite the lack of clear foresight in the financial investment sector, decisions have to be made and strategies formulated. Asset managers must always look for ways to steer their portfolios in the right direction to mitigate as much risk as possible and navigate through uncertainty. The emergency digital policies and regulations issued to tackle the COVID-19 outbreak are likely to remain the new norm. So, how do we see the year 2021-2022 at OTCFin? 

Change in Investment Trends

A change in investment strategies is unavoidable. The stock market is doing well but the ESG trend will accelerate the adoption of a holistic investment approach that integrate ESG and SDGs factors into investment decisions. A push will be made into Covid-19-related stocks including, healthcare, medicine, and public health.  Companies hesitant on global warming control, tobacco/gambling industries, or with ethical issues in their governance will have negative screening. Despite the anxiety over how ESG investments might affect returns, the market is showing growth in ESG ETFs and investors will continue to rely on ESG factors to look for quality in companies' operations and management.  

Change in Reporting

Companies are also pressured to respond to the growing need for disclosure. Transparency is an essential aspect of ESG Governance and is required by all stakeholders. Creating cohesive ESG reports can be a struggle for many firms due to lack of standards or data and companies with strong experience in data management and regulatory reporting such as OTCFin can help by providing clean and actionable ESG data. 

Companies with strong ESG ratings are typically better positioned to manage ESG material risks, which help portfolio managers understand each company's ESG policies.  However, the high degree of variability in ESG data scores makes it difficult for companies to build accurate and detailed reports fast and when needed. 

When data is limited, producing actionable reports and/or identifying poor performers becomes tedious and painful.  Again, OTCFin reports, which combine ESG and financial metrics, offer complete and powerful views of funds and company integrated ESG and financial data and help highlight potential issues at a glance. 

In this complex world of regulatory compliance, we anticipate that asset managers will increasingly turn to ESG data analysis tool. 

OTCFin's EDM platform facilitates data collection and computation challenges across asset classes to comply with various regulations. The platform, operated by OTCFin's Regulatory Data Management team, relives the pain associated with data collection, computations, and monitoring by our clients' internal teams. Get in touch with us today to schedule a demo.