The five-year milestone for two of Old Mutual's trailblazing ESG-focused index tracker funds is a compelling demonstration that investors can achieve positive environmental and social outcomes without compromising their long-term investment returns.

The Old Mutual MSCI World ESG Index Feeder Fund, which is rated five stars by Morningstar, underscores that you don't need to sacrifice investment returns to invest responsibly. A five-year timeframe is prudent for assessing equity portfolios, especially given the inherent risk associated with the equity asset class, which demands a longer investment horizon.

Feeder funds offer local investors an avenue to make rand-denominated investments into a local fund, which in turn feeds into a US dollar-denominated offshore fund. This structure enables investors to achieve currency and offshore diversification in an accessible manner through unit trusts and without depleting their SARS foreign investment allowance.

ESG-focused index funds bring along additional benefits. Firstly, they offer cost-effective exposure to segments of global equity markets, whether in emerging or developed market economies. Secondly, these products cater to the growing desire among investors to only buy from or support companies that have high ESG scores, implying that they are deeply committed to combating climate change, promoting inclusive growth, fostering social harmony, and ensuring proper governance.

At Old Mutual Investment Group, we place a lot of emphasis on stewarding the stocks in our actively managed funds. The decarbonisation of our clients' investments alongside our economy is a core focus of our stewardship strategy. With Cop 28 taking place in Dubai from 30 November to 12 December, we will see if we’re making progress towards net zero. South Africa as the largest emitter of sulphur dioxide (SO2), and leading in carbon dioxide (CO2) emissions. It is critical that custodians take stewardship seriously, as the social impact is huge, felt through poor health. At Old Mutual Investment Group, we have recently announced that due to a lack of progress or detail in Sasol's Climate Plan, we would be voting against it after engaging with Sasol for many years, without satisfactory progress.

Young investors in the Millennial and Gen Y and Z demographics favour ESG-focused investments to achieve their 'responsible living' goals. Meanwhile, those nearing retirement or already in retirement consider such investments to leave a positive legacy for future generations. The fact that they do not have to sacrifice performance to invest responsibly is an added benefit.

The Old Mutual MSCI World ESG Index Feeder Fund provides investors with exposure to developed market economies, offering global diversification in US dollar-based investments across various country markets, including Australia, Canada, Hong Kong, Japan, the United Kingdom, the United States, and several European Union countries. The fund comprises companies that have high ESG scores, making it appealing to investors who aspire to live responsibly and wish to align their investments with their personal values.

The Old Mutual MSCI Emerging Markets ESG Index Feeder Fund caters to investors seeking exposure to emerging markets, benefiting from their higher economic growth potential. This includes countries like Brazil, China, India, South Korea, Malaysia, Mexico, Saudi Arabia, South Africa and Taiwan, among others.

Companies with strong ESG credentials tend to excel in risk management, resulting in more consistent and less volatile returns. In fact, the MSCI Emerging Markets ESG Leaders Index outperforms its parent MSCI Emerging Markets Index more than 90% of the time.

Old Mutual Investment Group has partnered with MSCI, a global index provider, to rate all its funds in terms of their ESG conformity.

We are leaders in ESG investing in South Africa, and our current ESG product range reflects our extensive experience to help us stay at the forefront of this rapidly evolving field and work towards a more sustainable and equitable future for both our clients and the broader South African community. As a founding member of CRISA (Code for Responsible Investing in South Africa), we have been incorporating ESG practices into our investment philosophy and process and developed institutional ESG products almost a decade prior to launching retail. In the five years since the launch of these funds, we have effectively refuted the arguments presented by ESG sceptics.

In the realm of ESG investing, the old adage rings true: The proof of the pudding is in the eating. When it comes to ESG, the proof lies in the long-term returns.

To invest in one of Old Mutual's ESG tracker funds, contact your financial adviser or invest online at www.oldmutualinvest/responsibleinvesting.