THE RADIANT QUARTERLY NEWSLETTER
VOLUME 2 - Q1 2023
RADIANT BUSINESS UPDATE
At the beginning of 2022 we officially launched our investment capability and are now managing approximately $25m of client assets through the HSBC Radiant US Smaller Companies Fund—RESCX (smaller company growth; strategy factsheet) as well as an institutional, commingled fund (US small cap core) offered to US accredited investors1 through a private memorandum. With over a year of live history under our belts, we are starting to approach investors and consultants with a track record that is admittedly short but strong. We are especially interested in sharing our story with investors who have made public pledges to allocate to women- and minority-led firms. It is our strongest belief that investors (and markets more broadly) will be well served by ‘more voices at the table’.
The equity market volatility of 2022 that has continued into 2023 seems like it would have been a lousy time to start a money management firm, but we consider ourselves fortunate to have been invested during such trying times – it has given us the opportunity to demonstrate the resilience of our approach in the face of some real ups and downs. We do not believe we’re out of the woods yet with respect to the dual specters of inflation and interest rate hikes (even in the face of massive political pressure on the Fed in the wake of the SVB failure). An investment process like ours – one that invests at the intersection of strong fundamentals and attractive ESG – is what we believe will continue to fare well in the choppy waters on the horizon.
IN THE MEDIA HIGHLIGHT
We were proud to have been featured in a number of media publications, speaking engagements and podcasts over the last quarter. Here are a few of the key pieces of coverage which share our perspectives on a variety of topics:
- Radiant co-founder Heidi Ridley’s keynote on The New Era of Investing at the Women in Asset Management Summit
- Radiant and its co-founders on the cover and feature article for Business Concepts magazine
- Radiant co-founder Kathryn McDonald on Barron’s ESG Investing at a CrossRoads Webcast
ESG in the US: We need rational debate, not political spin
As we turned the corner into 2023, both the concepts embedded in ESG and the acronym itself became squarely part of the popular consciousness in the United States. With popularity comes challenges though, with one end of the spectrum grappling to understand the basics and the other yearning for much greater sophistication. In both instances, the questioning of ESG has intensified. This is a positive development as deliberate interrogation will ultimately be required for confidence building and genuine productivity.1
To address the concerns of each extreme, we remind ourselves that our job as investors is to predict the future, and the motivation for including ESG information in company-level analysis is to produce a more robust, better-informed picture of how companies will thrive – or struggle – in a future that may look very different than the past or present. We reject the shorthand phrase, ‘ESG investing’, as there’s really only… investing. We examine environmental, social and governance information within our investment practice, but at the end of the day, the use of that information complements an extraordinary amount of other fundamental and market information in the service of building the most accurate forecast of the threats and opportunities companies face.
Over the last 10+ years, there has been an awakening among many investment managers to the fact that the information considered to be “ESG” is a powerful supplement to traditional financial statement information; that it is economic in nature and material. With this recognition, most managers have begun to incorporate ESG considerations into their processes – a lot or a little! – because they believe it will contribute – a lot or a little! – to their investment edge. Put simply, investment managers always want more- not less- information about how a company is competitively positioned relative to its peers.
Even among (or especially among!) active managers who have been using ESG information for years, there are many arguments we can and ought to have: the weight of ESG information relative to other types of information, all manner of investment horizon debates, the assumptions underlying quantitative models (with climate models being first on the list), which disclosures we should expect from companies, the efficacy of engagement. Rigorous debate over all of these ideas and more is absolutely necessary as we continue to push for better investment results, and simultaneously answer questions from those new to the subject matter as well as those with years of experience.
Our hope is that serious and public debate on ESG topics among professional investors will begin to drown out the deeply uninformed comments coming from some politicians and agitators. As has been noted by Harvard University2 and others, the pace of US states’ passing of anti-ESG legislation and the inking of anti-ESG proposals has only increased, though with respect to the former, there is evidence of pushback from the actual investors that would have to implement the legislation,3 and there is no sign that the latter would garner any meaningful support if last year’s results are indicative. But the larger point is that these politically motivated comments are purely a distraction from the real investment debates that need to take place.
In sum, there is much to debate about ESG on the part of investors. We encourage all market participants to engage in rigorous discussions, and for those whose savings are tied to our investment actions to pay close attention to those deliberations because they are deeply important. We will reveal our own view plainly: those provocateurs who would ignore, or worse, denigrate without factual basis the information contained within E, S, and G analysis as a scare tactic to inflame opinions may consign many participants to live with the consequences of investment decisions made with less- not more- information.
 While we take the Gartner Hype Cycle with a grain of salt the size of a bathtub, it does seem to describe ESG’s ‘journey’ to date. Gartner hype cycle – Wikipedia Sitting in what feels like the ‘Trough of Disillusionment’, we believe that we will collectively emerge toward a better, more nuanced understanding of ESG and impact thanks to thoughtful work that is being done by many practitioners today.
We find inspiration all around us — people and organizations doing work that is deeply meaningful and deeply necessary. These are two examples that we hope you find inspiring, too:
An artistic and provocative demonstration investigating individual and collective vulnerability and resilience. New York-based artist Sarah Cameron Sunde stands in a tidal bay for a full tidal cycle (12-13 hours) as water engulfs her body and then reveals it again in Maine, Mexico, California, The Netherlands, Bangladesh, Brazil, Kenya, Aotearoa-New Zealand, and New York.
This is a video that is a few years old, but it stands the test of time! One of the best explanations of ‘circular economy’ we’ve heard. Dame Ellen MacArthur is a fascinating person in her own right, but it is her work on circularity (especially plastics) that particularly inspires us.
Going forward, we warmly welcome any inspirations or initiatives you might come across that would be worthy of sharing with our broader community. Please feel free to email us your thoughts.
Disclaimer : This newsletter is being furnished to you on a confidential basis. Any reproduction or distribution of this newsletter or accompanying materials, if any, in whole or in part, or the divulgence of any of its contents without the consent of Radiant Global Investors, (“Radiant”) is strictly prohibited. The information contained herein does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product managed or advised by Radiant Global Investors (“Radiant”). Any such offer or solicitation for an interest in any product may only be made by means of delivery of an approved offering memorandum or prospectus (“Offering Document”). The information in this presentation is qualified in its entirety, and subject to, the information contained in the relevant Offering Document. Radiant Investment Management is an SEC Registered Investment Advisor offering investment management portfolios for both Institutional and Retail investors. For more information please visit https://adviserinfo.sec.gov/firm/summary/316920