02-09-2023, 02:35 AM
(02-08-2023, 02:26 PM)basballguy Wrote: Your linked study is an interesting read....but when they use words like "may", "could", or "should" it becomes all speculative for me and misdirects from actual facts.
There are likely people that love the idea of ESG investing...and sadly, those people will probably not experience the same gains as common sense investing.
Also, this has very little to do with diversification. Fair question though. There's tons of ways to diversify. However, if you gave me 100 bucks to invest on your behalf and i told you 20 bucks of that will net a return of 1% while the other 80 bucks will net a return of 8%, wouldn't you rather have the 8% return?
In the grand scheme of things, if someone is vigilant in their investing, this probably doesn't impact them. But most people don't even look at their 401k for decades and those will be the ones that get screwed. I personally would not invest in any fund that isn't attempting to maximize returns.
My big take away from the one I linked was
"The heart of the 2022 Biden Rule is the requirement that an ERISA fiduciary must make investment decisions “based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis.” The heart of the 2020 Trump Rule was the requirement that an ERISA fiduciary must make investment decisions “based only on pecuniary factors.” But a pecuniary factor was defined by the Trump Rule to mean one “that a fiduciary prudently determines is expected to have a material effect on the risk and/or return of an investment.” The changes in the Biden Rule from the Trump Rule are thus cosmetic: changing the terms “prudently” to “reasonably,” and “material” to “relevant.” In practical terms, the Biden Rule replaced the Trump Rule’s use of the term “pecuniary factors” with its definition provided in the Trump rule. Crucially, both the Biden Rule and the Trump Rule specify that a “fiduciary may not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to other objectives, and may not sacrifice investment return or take on additional investment risk to promote [other] benefits or goals.”"
