The active manager's edge: Being mindful of ESG factors is simply good risk management

Deep Dive into corporate governance

There are two stages to assessing corporate governance when analysing funds: how the fund manager considers governance in their own stock selection process, and how they themselves are governed running that process.

Picking stocks with good corporate governance should be an integral part of a fund manager's philosophy - a company with good governance is one that will last, and ultimately secure ongoing revenues, and profits and dividends for shareholders. It is the active manager's edge.  In certain markets, this edge is wide - in emerging market companies where shareholder rights are less prevalent, and legal or regulatory structures less stringent, sorting the wheat from the chaff can result in considerable outperformance over the benchmark. Janus Henderson's Ross: We are nowhere near an ESG bu...