Insights
We discuss the ESG Orphans performance in Q1. This includes a reversal of 2022 trends along with the bloom wearing off the ESG rose. ESG outflows have started and inflows towards ex-ESG (our Orphans) have too. The ESG emperor is wearing no clothes. ESG assets are behaving as such. Risk-adjusted returns in ESG are negatively skewed as the effects of years of malinvestment and misallocation of capital are starting to be felt. The pendulum has shifted.
We discuss the ESG Orphans performance in Q1. This includes a reversal of 2022 trends along with the bloom wearing off the ESG rose. ESG outflows have started and inflows towards ex-ESG (our Orphans) have too. The ESG emperor is wearing no clothes. ESG assets are behaving as such. Risk-adjusted returns in ESG are negatively skewed as the effects of years of malinvestment and misallocation of capital are starting to be felt. The pendulum has shifted.
Mark Neuman was interviewed by Tony Dong of ETF Central. Mark discusses the origins of the ESG Orphans thesis, the security selection process, recent successes, and the alpha generation. Mark also discusses the outlook for 2023 and beyond.
Mark Neuman, CIO and Founder of Constrained Capital, speaks with Nicole Petallides at TD Ameritrade Network to discuss the market action of 2023 year-to-date - “Reversion of the reversion of 2022”. Mark explains what this phrase means and continues to discuss where opportunity may exist on this segment with @TDAmeritrade.
Mark Neuman, CIO and Founder of Constrained Capital, joins Reuters TV to discuss the Fed & Fed Speak along with stagflation, what it is, and what it might mean for markets going forward into 2023 and beyond.
Mark Neuman, CIO and Founder of Constrained Capital, discusses the challenges with ESG as we have seen it heretofore. ESG is sold as a panacea when in fact investors don’t know what they own. This leads to very imbalanced risks and inferior risk-adjusted returns. ESG investors are paying up for worse outcomes and failed objectives. The job of RIAs and investors has gotten more difficult with the false narratives in ESG. Investors need to do more due diligence and customize their investments to achieve clear goals.
January saw a massive reversion of the previous years’ ESG reversion. Everything that got killed in 2022 like tech, ESG strategies, and the SPX screamed higher. 2022’s outperformers like ESG Orphans and energy and value lagged. Stay the course, ESG Orphans will work on longer time horizons.
Happy New Year! Bearish action defined 2022. Those have been rare since the Global Financial Crisis.
It was quite a month with the ESG Orphans ETF $ORFN advancing 5%. That compares to +5.4% for the $QQQ, +5.4% for the $SPY, and +2.2% for the $IWM. For the ESG-related ETFs, we saw ESGU (Blackrock’s ESG ETF) +5.5% and ESGV (Vanguard’s ESG ETF) +5.4%.
Mark Neuman, CIO and Founder of Constrained Capital, speaks with Caroline Woods at TD Ameritrade Network to discuss the Constrained Capital ESG Orphans ETF (ORFN), the strategy behind the ETF and the sectors that are included. “I created this to help investors manage ESG risks and I think that it is an offset to exposure to the ESG investment thesis,” explains Neuman.
Mark Neuman, CIO and Founder of Constrained Capital, rang the opening bell for the New York Stock Exchange.
Mark Neuman, CIO and Founder of Constrained Capital, joins Bloomberg Radio to discuss investing strategies and stocks excluded from ESG investing. “I’ve approached it by isolating the companies most excluded and focused at the investor level, saying ‘this diversifies your portfolio, focuses on what is not crowded,’” says Neuman. (Mark appears from 32:30 onwards.)
Mark Neuman, CIO and Founder of Constrained Capital, joins Reuters TV to discuss performance in the tech sector and investors' fears about interest rate hikes. “I think the tech companies really over hired and I think that part of that push for them to overhire was the continuously easy rates and that allowed a bit of excess hiring,” says Neuman.
Mark Neuman, CIO and Founder of Constrained Capital, joins Reuters TV to discuss the FTX debacle and the possible future for cryptocurrency. “The crypto bubble has now imploded, it’s over for most of crypto. There are still some coins out there like Dogecoin and Litecoin that still have market caps of $10 billion and I think that there is still more wood to chop in this area of crypto,” he explains.
Mark Neuman, CIO and Founder of Constrained Capital, joins Reuters TV to discuss Elon Musk’s recent statements and actions since taking over Twitter and the impact on Tesla buying decisions. “Tesla is in a really tricky spot here. Elon Musk took over Twitter and he is now ostracizing a lot of people. Such that they might believe, if I own a Tesla, maybe I'm a MAGA supporter or maybe I'm a certain political side of things,” states Neuman.
Mark Neuman, CIO and founder of Constrained Capital, joins Ben Carlson and Michael Batnick on the Animal Spirits Podcast to discuss stocks that have been orphaned by ESG investors, the process of constraining capital for these type of investments, and how politics surrounding these companies has an impact on investing. “The ESG orphans are the exclusions from the ESG bubble of the past decade. The result from this is misallocation of capital and malinvestment, which creates these opportunities and distortions in the markets,” says Neuman.
It was quite a month with the ESG Orphans ETF $ORFN advancing 5%. That compares to +5.4% for the $QQQ, +5.4% for the $SPY, and +2.2% for the $IWM. For the ESG-related ETFs, we saw ESGU (Blackrock’s ESG ETF) +5.5% and ESGV (Vanguard’s ESG ETF) +5.4%.
Mark Neuman, CIO and founder of Constrained Capital, speaks with Vivien Lou Chen of MarketWatch about his market outlook for 2023. “The tricky part for investors in a stagflation scenario would be confusion over where to invest. In a stagflation environment, there’s no defense for central banks. And if we are going into a stagflation environment, where does that leave investors? There’s always going to be sectors that act better than others, and I think the commodity patch is where I would look. I would continue to look at under-owned, under-invested and necessary areas, which makes commodities very interesting,” states Neuman.
Mark Neuman, CIO and founder of Constrained Capital, speaks with Chris Carosa at Forbes about the Department of Labor’s new ESG rule, which permits fiduciaries to consider ESG when investing. “The explosion in ESG assets has herded investors all into the same stocks. These are too crowded; they all move together and, in this case, have moved down. Too many investors don’t know what they own while believing they own ‘ESG,’” says Neuman.
The 3rd installment in the Truth in ESG series is here and it features The Story of the ESG Orphans”. Mark Neuman, CIO and founder of Constrained Capital, talks about a few of the past episodes highlighting interviews with NYU’s “Dean of Valuation” and ESG skeptic, Aswath Damodaran, as well …
Mark Neuman discusses year-end position squaring and the outlook for 2023 focused on tech and energy. There is a discussion of seasonality around the holidays and then talk of energy continuing to outperform the market as well as where tech fits in. He discusses that investors should look at emerging …
ETF.com reporter Shubham Saharan speaks with Mark Neuman, CIO and founder of Constrained Capital, about the performance of the ARK Innovation ETF (ARKK) following the recent CPI report data and what the better-than-expected inflation data from the report means for other tech stocks. “The idea is that the Fed is …
The ESG Orphans ETF $ORFN gained 13.2% in October tracking the ESG Orphans Index that gained 13.3% in the month.
Mark Neuman, CIO and founder of Constrained Capital, addresses various ESG investing topics with Reuters Global Market Forum. While focusing on fossil fuels, Neuman also highlights the recent breakthroughs in electricity and provides background on his ESG Orphans ETF. “I created the ESG Orphans Index, and the ETF $ORFN, to …
Mark Neuman, CIO and founder of Constrained Capital, speaks with Jacob Wolinsky at Forbes on the lack of quantitative standards in defining ESG rankings. “In my research, I discovered that E, S and G ratings by any of the many agencies varied from company to company. For example, I might …
Mark Neuman, CIO and founder of Constrained Capital, speaks to Value Walk on the details of his ESG Orphans basket and elaborate on why he thinks ESG has failed. “I don’t think society is better off. The massive amount of risk versus returns is not that worth it. If you …
Mark Neuman, CIO and founder at Constrained Capital, speaks with reporter Shubham Saharan about earnings in the technology sector and how they’re affecting ETFs. Neuman discusses how the continuing strength of the dollar is impacting international, big-tech conglomerates and how there are translation losses for companies like Microsoft and Alphabet, …
Mark Neuman, CIO and founder of Constrained Capital, joins Nate Geraci of the ETF Prime podcast to highlight the benefits and backstory behind the ESG Orphans ETF. “An ancillary consequence of ESG investing is low returns. The excluded stocks, the isolated stocks, generally have higher expected returns,” says Neuman. Over …
Mark Neuman, CIO and founder of Constrained Capital, speaks to Nicole Petallides of TD Ameritrade Network on the anti-ESG movement and why investors should look to invest in traditional energy sources. He also provides insight into the ORFN ETF and its benefits. “The ORFN ETF is composed of ESG exclusions …
Mark Neuman, CIO and founder of Constrained Capital, speaks with Michelle Fox of CNBC.com on investing sectors that have been historically strong during a recession, citing alcohol stocks as an area to focus on. “Alcohol has a tendency to survive these times. In a market where things go down, these …
I sat down with NYU Professor Aswath Damodaran, the “Dean of Valuation” to discuss ESG. The Professor was an early ESG skeptic. His research validated the work done by Constrained Capital and reaffirmed the opportunity for ESG Orphans and $ORFN. Damodaran highlighted the ruse that is ESG and the false …
Cinthia Murphy of ETF Think Tank reports on the recent launch of Constrained Capital’s ESG Orphans ETF. In addition to highlighting the basics of this anti-ESG ETF, Murphy goes on to discuss the benefits that similar “anti ETFs” have in comparison to traditional ones. “$ORFN highlighted as an ‘anti-ESG’ ETF. …
FT’s Emma Boyde writes of increasing scrutiny and regulations against ESG and ESG funds. We highlight the restrictions, capital constraints imposed on certain excluded sectors, the Orphans, as opportunity going forward. Rule changes, new classifications, and overall change in taxonomy on these previously excluded sectors make them more attractive investments …
Mark Neuman, CIO and founder of Constrained Capital, talks with Chris Carosa of Forbes on the impact ESG funds have in the overall landscape of their respective industries. Neuman highlights sustainability ESGs stating, “70-80% of ESG funds hold Amazon, which has the top global carbon footprint and is the #3 …
Energy expert Dr. Anas Alhajji and I discuss energy, ESG, and the future of fossil fuel and nuclear energy. Click to see the video where Dr. Alhajji discusses: This fascinating discussion with Dr. Alhajji focuses on fossil fuel and nuclear energy through the ESG lens. Catch the point (5:45 in) …
It was a September to remember in the markets. The ESG Orphans Index fell 9% in September. No place was safe to hide. Even what we consider “safer” areas of the markets, lower beta, value names, dividend paying sectors, were not safe. It reminded us of the old adage, “When …
The ESG Orphans Index & $ORFN is an apolitical investment thesis. These are excluded securities avoided by the ESG investing bubble. Hedge fund legend Cliff Asness called these high expected return securities. The ESG Orphans are fossil fuel, nuclear energy, weapons, alcohol, tobacco, & gambling. Shunned by malinvestment & misallocation …
Friday Afternoon Musings, Thoughts Into the Weekend Been a tumultuous week. I think we learned a lesson about crowded investment spaces and herd mentality working the OPPOSITE of how it worked during the bull market of previous years. When everyone owns the same stuff, or over owns may be a …
News Stories Around ESG Orphans, ESG in General ESG Orphans’ Mark Neuman on TWTR Spacehttps://twitter.com/i/spaces/1OdKrzEEPRkKXOrphans’ sum: Mark on TWTR space, talking, “Truth in ESG.” Theme, research behind $ORFN. 5600 listeners tuned in. Hosted by George Noble. ESG Pushback, Confusionhttps://www.forbes.com/sites/jacobwolinsky/2022/09/08/are-defense-stocks-now-esg/?sh=2a6b20591c81Orphans’ sum: ESG outflows net, volume in ESG in tech, confused ratings …
August gross returns$ORFN -0.01%SPY -4.08%QQQ -5.13%IWM-2.00%ESGU -4.03%ESGV -4.33%NULV -3.02%IWS -3.13% The August recap: Energy had a resurgence. Utilities did ok. Industrials weighed on the ESG Orphans. Alcohol was heavy with DEO -7.84% and BUD -9.68% (combined ESG Orphans weight 7.23%) dragging the Index down. Those two accounted for approximately -62bps …
Truth in ESG Global risks are rising every day. Energy and food insecurity seem to be atop everyone’s macro agenda. What caused this? How did we get here? Environmental, Social, and Governance (ESG) investing is the biggest investment force on Wall Street over the past decade. ESG combines social and …
https://www.etfstrategy.com/constrained-capital-debuts-esg-orphans-etf-10339/
The State of ESG….Part II…Where is Here? In Part I, we discussed the evolution of themes and concepts on Wall Street and how over time, with each new iteration, the original concept gets diluted and the goal obfuscated in favor of higher fees, middling returns, and little to no investing …
The State of ESG….Part I At Constrained Capital we apply nearly 30 years of Wall Street experience to allow us a deep dive into ESG from all angles, digging into the complexities of the ESG investing movement and its evolution into the largest investment bubble of the past decade. We’re …
https://www.theepochtimes.com/as-esg-comes-under-scrutiny-skeptics-and-contrarians-rise-up_4545343.html
ESG investors have been misled. ESG investing says one thing and does another. Those owning ESG funds may find their exposure runs counter to Wall Street legend Peter Lynch’s adage, “Know what you own.” This is a big risk in the markets. Mondelez (MDLZ) makes Chips Ahoy and Oreos. Coke …
The Rise and Fall of Crypto and ESG: If It Sounds Too Good to Be True, It Probably Is
Mark Neuman, CIO and Founder of Constrained Capital, discusses the bursting of the bubbles seen in 2022 including NFTs, SPACs, and Cryptocurrencies and how the next one up could be ESG. He discusses how investors can prepare and protect themselves for this potential further bubble unwind.