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October 29, 2020 - Kansas City, Mo.
Against the backdrop of a pandemic, healthcare continues to be front and center as the cause that aligns most with personal values or priorities when making an impact investment, according to a new survey by global asset manager American Century Investments®. Study results showcasing responses from the United States, United Kingdom and Germany , examined generational and gender-based attitudes toward impact investing and/or environmental, social and governance (ESG) investing.
"For those considering impact investing, healthcare is a top priority for investors in the U.S and the UK," said Guillaume Mascotto, vice president, head of ESG and investment stewardship at American Century. "While healthcare ranked lower for respondents in Germany, the threat of Covid-19 has put a global spotlight on health and wellness. In any case, our ESG team interpreted the results as an elevation of the social ("S pillar") within the ESG trilogy."
For the fourth time, American Century has surveyed adults (18 years or older) to better understand attitudes toward impact investing, financial investments designed to have a positive impact on society, while providing potential long-term returns. The initial survey in 2016 included only U.S. investors, but in recent years, the survey included respondents from the UK and Germany. Study results showed similarities and differences between the three countries.
When asked about which cause "matters most" to them, "healthcare/disease prevention and cures" topped the list in the U.S. and UK at 30 percent and 35 percent of respondents, respectively, which is consistent with the 2019, 2018 and 2016 results. "Environment/sustainability," ranked first with respondents in Germany. Other selected causes were "improved education," "mitigating poverty," "racial equity and social justice" and "alignment with religious principles."
While interest in impact investing remains compelling, it did dip slightly in this year's study from last year. In the U.S., the appeal decreased slightly to 51 percent in 2020 compared to 56 percent in 2019, which was up significantly from 32 percent in 2016. Almost half (48 percent) of the respondents in the UK found the concept of impact investing appealing in 2020 compared to 59 percent in 2019. New to the study this year, 25 percent of survey respondents in Germany found it appealing.
The interest was highest among millennials (ages 21 to 38). In the U.S., 60 percent of millennials found impact investing appealing compared to the UK at 64 percent. By comparison, 45 percent of millennials in Germany found the concept of impact investing important. Appeal among Gen X (ages 39 to 54) was 64 percent in the U.S., 50 percent in the UK and 36 percent in Germany. The appeal for baby boomers (ages 55 to 73), however, was lower, with 46 percent in the U.S., 34 percent in the UK and 26 percent in Germany. In all three countries, when asked about the term "impact investing," the majority of respondents were "not at all familiar" with the concept. Germany had the lowest familiarity at 70 percent.
The global study also asked survey respondents about how they felt about doing business with companies that align with their values. The results were down this year compared to 2019 in the U.S. and the UK. In the U.S., 29 percent of respondents answered, "Yes, it matters to me," compared to 32 percent in 2019. And in the UK, 20 percent felt it "matters" compared to 24 percent in 2019. In Germany, 41 percent responded, "No, it does not matter to me."
On the investment side of the survey, respondents were asked about considerations when making investments. "Return on investment," "risks," "fees," and "length of time the money will be invested" continued to be the most important factors when making investments in all three countries. Respondents were given several factors to consider when making an investment; "impact on society" was at the bottom of the list in the U.S., UK and Germany.
"Our late founder James Stowers, Jr. and his wife, Virginia, transferred their equity ownership stake in American Century to the endowment supporting the Stowers Institute, which has resulted in more than 40 percent of our firm's annual dividends being directed toward medical research.," said Mascotto. "From an investment standpoint, our focus on healthcare impact targets companies involved in new or innovative treatments for diseases including cancer; access to medicines and health care services in both developed and emerging markets; new solutions that lead to lowering the cost of health care; and more productive and efficient equipment, services and software used for research, diagnostic tests and therapies."
The survey was conducted among a representative sample of 1,002 U.S. adults,1,004 UK adults and 1,004 adults in Germany, 18 years of age and older from September 9-11 and September 10-15, 2020, respectively. The study was fielded using Engine's twice-weekly Online CARAVAN® Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult U.S., UK and Germany.
American Century Investments is a leading global asset manager focused on delivering investment results and building long-term client relationships while supporting research that can improve human health and save lives. Founded in 1958, American Century Investments' 1,400 employees serve investment professionals, institutions, corporations and individual investors from offices in New York; London; Hong Kong; Frankfurt, Germany; Sydney; Mountain View, Calif.; and Kansas City, Mo. Jonathan Thomas is president and chief executive officer, and Victor Zhang serves as chief investment officer. Delivering investment results to clients enables American Century Investments to distribute over 40 percent of its dividends to the Stowers Institute for Medical Research, a 500-person, non-profit basic biomedical research organization. The Institute owns more than 40 percent of American Century Investments and has received dividend payments of $1.6 billion since 2000. For more information about American Century Investments, visit www.americancentury.com.
When portfolio managers incorporate Environmental, Social and Governance (ESG) factors into an investment strategy, they consider those issues in conjunction with traditional financial analysis. When selecting investments, portfolio managers incorporate ESG factors into the portfolio's existing asset class, time horizon, and objectives. Therefore, ESG factors may limit the investment opportunities available, and the portfolio may perform differently than those that do not incorporate ESG factors. Portfolio managers have ultimate discretion in how ESG issues may impact a portfolio's holdings, and depending on their analysis, investment decisions may not be affected by ESG factors.
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