Canadian insurer Sun Life Financial Inc.’s investment arm may launch its second environmental, social and governance fund in Hong Kong in the wake of “encouraging” performance of the first one, says Stanley Ngan, chief executive officer of Sun Life Asset Management (HK).
The first fund, Sun Life AM Hong Kong ESG Index Fund, was launched in November 2020 and is an investment option in the company’s Mandatory Provident Fund (MPF) schemes. The fund tracks the Hang Seng ESG 50 Index.
“Since its launch, the Sun Life AM Hong Kong ESG Index Fund has outperformed the Hang Seng Index. The encouraging performance proves that ESG investing creates long-term value to investors and the world,” Ngan says in an interview with Asia Asset Management.
He believes ESG investing will remain a key theme for investors globally in 2022, adding that the company is “exploring the feasibility of launching another ESG fund in Hong Kong during the year”.
According to Ngan, Sun Life Asset Management, with its “prudent investment strategies”, plays an “instrumental role” in driving the performance of the MPF, Hong Kong’s largest public retirement scheme. The company is the third largest manager in the HK$1.18 trillion (US$151.2 billion) MPF market.
Meanwhile, Ngan is “positive” on the outlook for the global equity market but “neutral” on the bond market as the US Federal Reserve and other central banks end the ultra-loose monetary policies adopted to combat the coronavirus pandemic.
“During the forthcoming normalisation, reversal of bond purchases and higher interest rates would lead to costlier and tighter liquidity,” he warns.
“Companies that had been borrowing heavily to finance unprofitable business may be dealt a rude awakening as investors turn more impatient,” he adds. “On the other hand, established companies with solid balance sheets and strong cash flow generating ability could be in favour.”
