Singapore-based boutique asset management firm

River Valley Asset Management

River Valley Asset Management is a Singapore-based boutique asset management firm. Our team at RVAM strongly believes in being a trusted steward of our clients' wealth across generations.

Each of our fund managers has years of rich portfolio management experience over multiple market cycles at world-class investment houses. We bring our clients the combined strength of our investment team to manage their financial portfolios and to provide bespoke guidance on all aspects of their financial health.

We offer multi-asset class expert investment advice to accredited investors who are family offices, high net worth individuals and institutional investors to preserve and grow our clients' wealth.

The fund management team of the company includes Homiyar Vasania, Anand Ramachandran and Jamshed Desai.

Partner, River Valley Asset Management

Partner

MSCI Emerging Markets ESG Leaders Index / ESG

MSCI Emerging Markets ESG Leaders Index (M1EFESR INDEX)

The investment industry is used to trends coming and going; the fundamental precepts that we follow, however, have remained the same, i.e. buying a company which can generate wealth over the long run, at the right price. Many a time market fads pick up one premise and place excessive emphasis on it before moving on to the next trend. Occasionally, however, some of these trends become entrenched and end up getting absorbed into the core principles as the marketplace evolves in response to a changing environment. ESG is one such concept. It has always been lurking in the background in some form or the other but is now making its presence felt at the forefront of the investment decision making process.
&nbsp;&nbsp;
For more than half a century the corporate landscape, initially in the Western world and later increasingly around the world (as globalization spread), revolved around the primacy of shareholder wealth maximization (The Friedman Doctrine). This has sometimes led to extreme outcomes and occasionally scandals. But as economies have evolved, the recognition of corporate responsibility and its impact on society have come to the forefront, resulting in a re-evaluation of the rules of engagement of companies with all stakeholders. We at <a href="https://www.rivervalleyasset.com/investment-insights/" target="_blank" rel="noopener">RVAM</a> believe that we are in the midst of seeing a fundamental shift taking place in the framework of principles around which corporates are organized and based on which they engage with stakeholders. Investors are increasingly recognizing this and are often actively involved in shaping this evolving paradigm.
&nbsp;&nbsp;
The clarion call for this was the statement issued on August 19, 2019 by a group of top U.S. CEOs, part of non-profit grouping, <a href="https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans" target="_blank" rel="noopener">The Business Roundtable (BRT)</a>, announcing a new purpose for the corporation. They explicitly stated that “no longer do corporations exist principally to serve shareholders” and also outlined a modern standard of corporate responsibility “for the benefit of all stakeholders.''&nbsp;
&nbsp;
Writing about <a href="https://www.smartkarma.com/insights/corporate-governance-and-asian-challenges" target="_blank" data-smartkarma-citation="insights:13509" rel="noopener">Corporate Governance and Asian Challenges</a> in our <a href="http://www.rivervalleyasset.com/qql/slot/u1112/September%202017%20-%20Corporate%20Governance%20and%20Asian%20Challenges.pdf" target="_blank" rel="noopener">September 2017</a> newsletter, we mentioned that our core objective when investing assets is to protect capital and earn a reasonable return without taking excessive risk. Within that framework, we look at ESG issues as risk factors which need to be identified and evaluated to ensure that investment objectives of our clients are achieved. The investment case for every security has two aspects – one, the ability of a company to generate cash flows and use them to grow the business and second, the risk ascribed to the cashflow stream by the market and the consequent risk premium used to discount it. In some industries ESG issues can be a cost of doing business and result in a lowering of the future free cashflow generating ability of a company. In others it may be more about risk management and ensuring that social issues (like health and safety, diversity, labour practices) do not become a reputational issue that are not properly captured when evaluating financial metrics. Ultimately, as investors, we need to be confident that we are getting adequately compensated for the risk taken with the underlying investments. Predictability, a key focus of our investment discussion, requires us to evaluate all future risks and be able to quantify the potential impact. Read more in the attachment or visit our website :- <a href="https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/" target="_blank" rel="noopener">https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/</a>

The investment industry is used to trends coming and going; the fundamental precepts that we follow, however, have remained the same, i.e. buying a company which can generate wealth over the long run, at the right price. Many a time market fads pick up one premise and place excessive emphasis on it before moving on to the next trend. Occasionally, however, some of these trends become entrenched and end up getting absorbed into the core principles as the marketplace evolves in response to a changing environment. ESG is one such concept. It has always been lurking in the background in some form or the other but is now making its presence felt at the forefront of the investment decision making process.
&nbsp;&nbsp;
For more than half a century the corporate landscape, initially in the Western world and later increasingly around the world (as globalization spread), revolved around the primacy of shareholder wealth maximization (The Friedman Doctrine). This has sometimes led to extreme outcomes and occasionally scandals. But as economies have evolved, the recognition of corporate responsibility and its impact on society have come to the forefront, resulting in a re-evaluation of the rules of engagement of companies with all stakeholders. We at RVAM believe that we are in the midst of seeing a fundamental shift taking place in the framework of principles around which corporates are organized and based on which they engage with stakeholders. Investors are increasingly recognizing this and are often actively involved in shaping this evolving paradigm.
&nbsp;&nbsp;
The clarion call for this was the statement issued on August 19, 2019 by a group of top U.S. CEOs, part of non-profit grouping, The Business Roundtable (BRT), announcing a new purpose for the corporation. They explicitly stated that “no longer do corporations exist principally to serve shareholders” and also outlined a modern standard of corporate responsibility “for the benefit of all stakeholders.''&nbsp;
&nbsp;
Writing about Corporate Governance and Asian Challenges in our September 2017 newsletter, we mentioned that our core objective when investing assets is to protect capital and earn a reasonable return without taking excessive risk. Within that framework, we look at ESG issues as risk factors which need to be identified and evaluated to ensure that investment objectives of our clients are achieved. The investment case for every security has two aspects – one, the ability of a company to generate cash flows and use them to grow the business and second, the risk ascribed to the cashflow stream by the market and the consequent risk premium used to discount it. In some industries ESG issues can be a cost of doing business and result in a lowering of the future free cashflow generating ability of a company. In others it may be more about risk management and ensuring that social issues (like health and safety, diversity, labour practices) do not become a reputational issue that are not properly captured when evaluating financial metrics. Ultimately, as investors, we need to be confident that we are getting adequately compensated for the risk taken with the underlying investments. Predictability, a key focus of our investment discussion, requires us to evaluate all future risks and be able to quantify the potential impact. Read more in the attachment or visit our website :- https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/

MSCI Emerging Markets ESG Leaders Index

The Evolving Paradigm of ESG