Focusing on values with small systems

Every investment impacts the world in some way. Whether it is funding a mining company that is expanding its fracking activities or one that is committed to CO2-neutral transport and gender equality: "Investments slow down or accelerate economic progress ", Dr. Tillmann Lang, one of the four Yova founders, is convinced.

"Capital can be used to shape the world (positively or negatively). We help people build their wealth by investing in companies that contribute to a cleaner, greener and more socially responsible world," explains the investment expert.

Lang, who holds a PhD from the Chair of Sustainability and Technology (Sus- Tec) at ETH Zurich, worked in areas such as computer science, mathematics, energy and clean tech while still a student. "Even in my student days, I was dismayed that the financial world often shows unjust and rigid structures with regard to us humans and the environment." However, the current CEO never specifically wanted to enter the world of wealth. When he was looking for an individual hedge fund solution in 2016/17, however, he only came across one-dimensional solutions. On the one hand, he had to realize, impact investing was reserved exclusively for wealthy clients of private banks; on the other hand, his idea of investing did not necessarily correspond to the common sense of his generation.

Sustainability grey area

Until now, people have only had investment options insofar as investing their hard-earned money in risky projects; settling for "sustainable options" or accepting very low returns.

"Companies like Nestlé, Total SA and Saudi Arabian Mining are omnipresent. Worse, through their bank deposits and pension investments, we are unwittingly supporting the very companies that are fuelling the climate crisis and other great challenges of our time," explains Tillmann Lang.

Many people are surprised that leading petroleum companies run sustainability funds. How can this be? Many listed providers only provide one-sided data (such as electricity consumption). "Think of companies that make equipment for mining companies. Many of them also emit relatively few emissions. Therefore, they meet minimum sustainability criteria."

Still, the quintessential question arises: "Would a sustainable-minded person want to invest in a company that is so closely tied to an environmentally destructive industry?" That's a key sentence in Yova's recent whitepaper (see end of text).

Therefore, Dr. Tillmann Lang founded Yova with Dr. Christoph Birkholz and Erik Gloerfeld, who did research at ETH Zurich and RWTH Aachen, as well as two other IT and investment experts, in order to create transparency and concrete sustainable values in the often opaque financial world. In the meantime, 17 pioneers (including 10 female pioneers) work at the headquarters in Zurich West (many of them work full-time).

Investing with a hand and a foot

Unlike other impact investment providers, Yova (English derivation from "YOur VAlues") offers a managed investment universe of 400 stocks for everyone.

From as little as CHF 2000, investors can purchase shares in companies that are advancing areas such as the circular economy, digital development, renewable energies, clean water, plant-based food, medicine - for example, access to medicines, eradication of diseases - and much more (see end of text).

Swiss asset managers are committed to going even further than most portfolio providers. They do not only consider the sustainably reported "handprint" of a company. They also identify and explore "footprint" issues such as corporate governance, fair pay, lower CO2 emissions over longer distances and/or gender equality.

Once you have defined an investment strategy with your own preferences (including capital size, risk horizon and other individualisations), you receive reporting via Yova, which carries out its own internal market analyses. The asset experts also never put statistics in the foreground, they refer to values that compare a company's business activity, ESG criteria and - soon (keyword: "machine learning") - real-time data on capital flows.

"Many of our new customers are investing in shares for the first time because they can identify with the investment themes. They don't need any financial knowledge, but are guided through the process by smartphone, for example. They always have 100 percent transparency as to what they are investing in and at what cost," Lang continues. Depending on the amount invested, the costs amount to between 0.6 and 1.2 percent ("all-in fee").

No false promises

In the meantime, Tillmann Lang and his software engineers have been able to automate the otherwise time-consuming sustainability monitoring. "We have digitized the investment methods of private banks and developed our own engine.

The Yova engine always analyzes the client's financial situation in addition to the personal issues and creates a comprehensive personalized strategy that takes into account each client's risk range - but we don't make false promises that we are the market leaders, for example," explains the empathetic CEO.

The final portfolio consists of 30- 40 stocks diversified across different industries, countries, currencies and company sizes. In addition to equities, each strategy also contains government bonds. Since investment diversification and individual adjustments are not insignificant, the customer can also adjust his portfolio at any time by adding and removing certain companies, e.g. replacing Tesla with Xylem, a water purification company. When adjustments are made, the Yova engine automatically recalculates the entire portfolio to ensure that it is always sufficiently diversified and thus risk-optimized. - Incidentally, the investment strategy can be tested free of charge at yova.ch.

Success through justice

Everyone's shoe pinches somewhere else, and yet there is something like a common sense. Some people suffer from a lack of money, others live like God in France. In the southern hemisphere, drought dominates and in Europe, too, many people are still thirsting for education and equal opportunities. Tillmann Lang is convinced:

Companies have a strong influence on our environment and people - "often they are right in the middle of it". That's why he and his employees want to avoid or at least offset the biggest economic missteps. At Yova, you can invest in companies that change the world according to the investors' ideas.

In the meantime, in addition to factors such as return and risk, another aspect has been added that investors are increasingly paying attention to: sustainability. Nevertheless, there is a wide variance among the sustainably "labelled" forms of investment. "Unfortunately," Lang points out, "in every emerging market - and sustainability is one of them - there are free riders who adorn themselves with a label without changing their behaviour."

How does Yova define impact investing and sustainability? "We have adopted the definition of The GIIN (Global Impact Investing Network), the pioneer in the field of impact investing, it underlines: impact investing is investing with the aim of achieving a social and environmental impact in addition to a financial return."

Yova knows from countless studies and clarifications that a great deal needs to be done today on the issue of equality:

Women bear the brunt of climate change. They are central in the fight for a healthy planet and a better quality of life. Yova therefore offers a so-called "Gender Lens Investing (GLI)" platform together with the Think Yellow founders: "Yova Yellow" aims at both a financial return and the well-being of women and equality.

"However," Dr. Tillmann Lang concludes, "we are concerned with transparency and development opportunities for people in general. That's why we want to invest in companies that live equal opportunities, respect human rights, and do good in a sustainable way."