The oil spill from an investor’s perspective – not as bad

The BP oil spill in the Gulf of Mexico is not only the most devastating environmental disaster ever in the US, it raises issues around energy policies which continue to evolve. A client note from Russell Investments says energy stocks will continue to reflect the impact of the disaster and investors may well look at opportunities in companies involved in the clean-up effort or alternative energy supply.“The oil spill, environmental concerns and previous periods of soaring oil and gasoline prices have spurred countries, governments and individuals to pursue the development of alternative energy sources and policies,” the note, written by Natalie Miller, Russell’s consulting director of client services, says.

“Whenever disasters strike, stock prices rise and fall. In the case of the April 20 BP oil spill, energy securities immediately felt the impact; they lagged the broader US market by nearly 4 percentage points for the month of May (Russell 1000 Energy Index, –11.6 per cent; Russell 3000 Index, –7.9 per cent), and will continue to reflect the impact of this disaster.”

However, Miller says that the impact for investors with a well-diversified portfolio is likely to be relatively small. The state of the global economy and currency movements are more likely of greater concern, she says.

Sponsored Content

Leave a Comment

Sort content by

Disparity in policy portfolio risk profiles

A policy portfolio is a poor reflection of investor preferences, argued Peter Bernstein. This philosophical question has now been empirically tested by MIT’s Mark Kritzman, who shows the inter-temporal disparity of a policy portfolio’s risk profile. He suggests a simple framework for addressing this deficiency. Kritzman encourages investors to replace rigid policy portfolios with flexible investment policies.

Ventures on the risk spectrum

Hershel Harper received an early education in finance when he used to read Business Week in High School. The 43-year old now at the helm of the $27-billion South Carolina Retirement Systems, investing on behalf of South Carolina’s 350,000 public sector workers, says he knew back then he wanted to manage money: “I really am

Getting the commodities mix just right

While commodities are a controversial and problematic asset class to some investors, for others they are an ideal diversifier looking more attractive than ever. A mini-revival in commodity investing among US pension funds suggests the asset class may be enjoying a resurgence. The Los Angeles Fire and Police Pension System, Municipal Retirement System of Michigan

The end of beauty contest active management?

Designing and implementing concentrated, long-horizon investment mandates would support longer term thinking, align pension organisation’s goals with its stakeholders, and reduce transaction costs. This was one of the recommendations of a two-day workshop in Toronto last month, attended by a delegation of 80 pension fund executives from around the globe. Aimed at uncovering the meaning

Italian fund rides out crisis in style

The wrath of the European sovereign debt crisis may have left its mark on Italy in more ways than one, with both its financial and political scenes regularly sliding into crisis mode for the past year or two. However, the nation’s largest private pension investor, the €7.75-billion ($10.1-billion) Cometa fund, has firmly kept on track

Paul Marsh: live with low returns

The London Business School’s emeritus professor of finance Paul Marsh admits that you have to be slightly mad to embark on the kind of research detailed in the latest edition of Global Investment Returns Yearbook. This year Marsh and colleagues Elroy Dimson and Mike Staunton – Marsh describes the three of them, pictured below, as

Previous