Arvind's Newsletter

1.Tata, Indigo prepare to swoop in on Go Air’s aviation assets amid insolvency row.

India’s biggest conglomerate and largest airline are in talks to take Airbus SE planes from Go Airlines India Ltd. after the carrier filed for insolvency protection and was ordered to stop selling tickets.

Tata Group and IndiGo are holding separate negotiations with Go Air’s lessors, as well as discussing landing and parking slots with airport operators, including in New Delhi and Mumbai, according to people familiar with the matter. Go Air’s lessors are seeking to repossess 36 aircraft, filings with India’s aviation regulator show.

Several other parties have also expressed interest in the airport slots, the people said, asking not to be identified because the discussions are confidential. New carrier Akasa Air is among them, one of the people said.

The clamor for Go Air’s assets may complicate its bid to restructure debt and restart operations.

2.The number of women holding senior corporate positions is rising, albeit from a very small base. Women CEOs — who in 2015 were famously outnumbered at the top of the biggest U.S. companies by men named John — now consistently outnumber any single male name, Bloomberg noted. More progress is being made when it comes to corporate boards in Europe: Women occupy more than 40% of board seats among Britain’s biggest public companies, and passed the 20% mark in Germany for the first time last year. Women in Europe have made less headway when it comes to senior executive positions, however, accounting for just 8% of CEO positions in Britain.During 2013- 2022, India made significant and rapid progress in increasing women representation on boards from 6% in 2013 to 18% in 2022 according to EY report on Diversity in Boardroom.

3.Sal Khan of Khan Academy has a Ted Talk on buildng a chatbot maths tutor.

Sal Khan, the founder and CEO of Khan Academy, thinks artificial intelligence could spark the greatest positive transformation education has ever seen. He shares the opportunities he sees for students and educators to collaborate with AI tools -- including the potential of a personal AI tutor for every student and an AI teaching assistant for every teacher -- and demos some exciting new features for their educational chatbot, Khanmigo.

4.Apple and Google partner on bluetooth tracking

Bluetooth trackers (Tile, Apple AirTags) are very cool, but people use them for stalking. Now Apple and Google have partnered on a standard so that any iPhone or Android phone will tell you if a tag that isn’t yours is moving around with you (for example, it’s been hidden in your car or bag). The OS is the right place for this (you don’t want targets to have to know to install something)/

5.The anti-ESG industry is taking investors for a ride, opines the The Economist.

Until recently, there were two iron laws in investing. One, popularised by Milton Friedman, a Nobel-prizewinning economist, posited that a company’s responsibility above all else was to provide returns to its shareholders. The second, promoted by Jack Bogle, founder of Vanguard, an investment firm, held that asset-management fees must be driven to the lowest level possible.

But like all revolutions, this one has generated a reaction. The anti-ESG backlash is flourishing. Vivek Ramaswamy, author of “Woke, Inc.” and co-founder of Strive Asset Management, announced his candidacy for the Republican presidential nomination on February 21st. The firm he left to pursue his political ambitions promotes exchange-traded funds (ETFS) and proxy-voting services that push back against what it sees as the politicisation of corporate governance.

Anti-ESG legislation is also rippling through American state legislatures. In February Ron DeSantis, Florida’s governor, who is also expected to compete in the Republican primaries, proposed legislation to prohibit the use of ESG criteria in all of the state’s investment decisions. Given the supervisory role many statehouses hold over public pension funds, many of which have hundreds of billions of dollars in assets, this sort of legislation could have big implications for the asset-management industry.

There are plenty of problems with the ESG movement. Working out if assets are ESG-compliant is complex, and prone to bias, mis-measurement and public-relations peacocking. Proponents of feel-good investing want to have their cake and eat it, insisting that the focus on stakeholders is actually better for shareholders, too.

But in defending Friedman’s law, the anti-ESG crowd is struggling with the other part of the investing canon—the importance of low fees. At the moment, taking a position against ESG is much more expensive than going with the crowd. This is particularly true when it comes to anti-ESG laws, which are more preoccupied with bashing ESG-promoting firms than with prioritising shareholder returns and cutting costs for taxpayers.

A study by Daniel Garrett of the University of Pennsylvania and Ivan Ivanov of the Federal Reserve Bank of Chicago considers one anti-ESG stance. It finds that Texas’s anti-ESG laws, which had the unfortunate side-effect of thinning out the number of bond underwriters, raised issuers’ interest costs by $300m-500m in their first eight months.

Meanwhile, Indiana’s anti-ESG bill was watered down after the state’s fiscal watchdog suggested that it would cut annual returns to the state’s public pension funds by 1.2 percentage points, because it would prevent the use of many active managers and limit investment in the private-equity industry and thus private markets.

Similarly, the cost of anti-ESG ETFS is considerable, and their benefits questionable. Strive’s most popular ETF, DRLL, focuses on the American energy industry. But the fund charges fees of 0.4% a year on assets, compared with 0.1% for XLE, the largest regular energy ETF, created by State Street Global Advisors, another investment firm. This amounts to a big drain on a buyer’s compounded returns. Moreover, the top ten holdings in both funds are the same.

Any success that Strive achieves in changing corporate governance and raising returns will be enjoyed by holders of other energy funds as well. Therefore an anti-woke investor may be best advised to stick with lower-fee funds and wait to see whether the efforts of anti-ESG activists amount to anything. It could be a long wait: it is difficult to see exactly how anti-ESG offerings will expand their audience beyond the most committed fellow travellers.

For a hard-headed investor who still believes in Friedman’s doctrine, the anti-ESG movement would hold an obvious appeal were it to become less costly. But at the moment there is only one rational choice. Investors, and taxpayers, are far better placed when they follow the crowd. That means coming to terms with Woke, Inc., rather than paying hefty sums to push back against it.