Looking behind the definitions as clients demand grows

The need for clarification

While far from being perfect, Mifid II has been successful in pushing for greater cost transparency but unfortunately nothing on sustainability. 

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Reviewing key investor information documents, key information documents or factsheets usually tells you nothing about how sustainability is embedded within the process of a fund. There have been some initiatives like the Morning-star Sustainability Rating but the results have been widely criticised and I would argue confuse investors even more.

I’d like to see further clarity around the strategy each sustainable fund is pursuing, themes or sectors they are favouring and screening out, as well as the publication of the full list of holdings on a regular basis. 

Investors also want to understand the impact they are achieving so reporting on impact should become mandatory for all funds. Definitely something to suggest for Mifid III.

Damien Lardoux is a portfolio manager at EQ Investors