This course fully focuses on the theory and practice of sustainable investments. It demonstrates how sustainability issues affect the development of financial products and may influence the performance of investment strategies. The first part of the course explains how sustainable investing translates to the management of investment portfolios in traditional asset classes, such as the optimization of return/risk characteristics of equity portfolios, but also fixed-income portfolios, by means of Environmental, Social, and Governance (ESG) Factors. Subsequently, the course explains how analysing the (non-) financial preferences and behavioural characteristics of prospective clients/customers are important in developing and successfully marketing sustainable financial products. Students can also get a basic understanding of sustainable investments that are explicitly intended to have positive sustainable-development impact in emerging markets, such as “impact investments” and “microfinance”.
The goals of this course are to discuss sustainable and responsible investments in the context of stock-market listed firms and other classes, through both an academic and practitioner’s lens. Students first learn how environmental, social, and governance factors as well as fundamental financial factors can affect the decisions of equity investors who seek for a specific return/risk profile of their portfolios. Subsequently, students learn beyond the issue of return-risk optimization how important it is to understand the financial and nonfinancial preferences of investors, and concepts such as trust and cheating, all of which have practical implications for the successful development investment products that cater to specific groups of clients.
Students are expected to understand the key basic concepts in investment analysis and portfolio theory (such as CAPM, Modern Portfolio Theory, and investment performance evaluation). Analytical skills, statistics, and an advanced level of English are required.
The course is taught by the use of a collection of top-ranked academic and high-impact practitioner-oriented articles, and cases that help students to confront theory with practice.