Aims and Objectives
There are three main primary factors/goals driving the creation and implementation of the Ghosal fund on an ESG framework. These are; Education, Financial and Sponsorship.
Education is the cornerstone on which the fund has been created and has been running on since its inception in 2012. The end goal for a majority of those in the Ghosal Fund is to pursue a successful career in financial services within a variety of sectors ranging from Investment Banking to Consultancy. It is therefore imperative that with ESG appearing to be the future of financial services, that the fund’s members must be equipped with the relevant knowledge. This is evident with 93% of UK issuers in 2018 reporting to be involved in ESG financing (Source, https://www.gbm.hsbc.com/insights/sustainable-financing)
Ultimately, for the Ghosal Fund to be an attractive proposition to sponsors, the university and prospective analysts; the portfolio must be in good shape. The benchmark being utilised is the MSCI World Index due to the fund’s unrestricted global equity allocation and, as of 24th January 2019, the Ghosal Fund’s virtual portfolio is out performing its benchmark index by around 100bps.
With the implementation of the ESG framework, there is scope for the Ghosal Fund, the real- money portfolio in particular, to generate even greater returns. This is supported by the vast majority of academic literature on the subject with Friede et al., (2015) reviewing more than 2,000 empirical studies, coming to the conclusion that 90% of those studies report a positive relationship between ESG and financial performance.
Finally, another long-term aim for the Lancaster University Ghosal Fund is to become self- sufficient with financial sponsorship from a wide variety of financial institutions and businesses. It is the fund’s belief that this will enhance the reputation of Lancaster University with the Ghosal Fund being only one of six real-money student-run investment funds in the country.
Having a credible ESG framework will encourage external sponsorship, potential applications and ultimately the University’s reputation. As aforementioned, financial institutions are seeking to prioritise ESG within their business processes to improve their reputation; therefore, the opportunity of being able to sponsor a student-run investment fund who themselves are prioritising ESG within their investment rationale is certainly an attractive one.
The flow chart below summarises/illustrates the selection process of weekly pitched stocks for inclusion in the portfolio