In association with
Head of UK Funds, Architas
hen the first UK ethical funds were launched in the early 1980s, their main objective was to help investors align their savings with their personal values by excluding specific industries such as weapons, tobacco and fossil fuels. Often, this meant a loss of performance for investors as some of these industries had historically delivered strong returns.
No longer considered a niche interest, sustainable investing is now seen as a viable source for potential returns
The value of
the value of values
Hover and click for each chapter
Profit with a purpose
Changing perspectives on sustainable investing
Are opinions on the move?
advisers think of sustain-ability?
What is the future of sustainable investing?
Click here for disclaimer
The Architas funds featured can invest entirely in units of collective investment schemes. The value of the funds and the income from them can fall as well as rise purely as a result of exchange rate fluctuations. Clients can invest in the funds through a number of financial products. These funds may not be appropriate for investors who plan to withdraw their money within five years.
If you require further information on any of our funds, the Key Investor Information document (KIID) and the prospectus are both available free of charge on request from Architas Multi- Manager Limited. The KIID is designed to help investors make an informed decision before investing. You can view or download all our funds’ KIIDs via our website at architas.com on the home page and the literature library.
AXA is a worldwide leader in financial protection and wealth management. Architas operates three legal entities in the UK; Architas Multi-Manager Limited (AMML), Architas Advisory Services Limited (AASL) and Architas Limited. Both AMML and AASL are owned by Architas Limited, which is a 100% owned subsidiary of AXA SA (a company registered in France).
AMML is an investment company that provides access to other investment managers’ services through a range of multi-manager solutions, including regulated collective investment schemes. AMML in the UK works with strategic partners and AXA Group internal fund managers, to find out more information about this please visit architas.com/inhousestratpartners/. AMML is a company limited by shares and authorised and regulated by the Financial Conduct Authority (Firm reference Number 477328). It is registered in England: No. 06458717. Registered Office: 5 Old Broad Street, London, EC2N 1AD.
This is for professional clients only and should not be distributed to or relied upon by retail clients
Fast forward three decades, the universe has seen significant transformation, led initially by institutional investors and more recently by retail investors. It is no longer just about ethical investing, but also Environmental, Social and Governance (ESG), impact, engagement and so on. Specialists now refer to responsible or sustainable investing as an umbrella term.
By focussing on ESG considerations in their investment decisions, investment professionals have realised that they could potentially deliver performance by 1) identifying companies likely to benefit from the challenges of a world dominated by climate change and 2) avoiding - or sometimes engaging with - companies whose harmful practices may threaten their long-term viability. Sustainable investing is becoming mainstream, driven by strong client demand.
We hope you find this guide useful in understanding the many opportunities
that sustainable investing can bring to your clients’ portfolios as well as
Past performance is not a guide to future performance. The value of your client’s investment and the income derived from them can go down as well as up and they may not get back what they originally invested.
Photo by Johannes Plenio on Unsplash
Many of the highest yielding investments have focused on industries and companies that don’t necessarily ‘do good’ in the world. From health-damaging tobacco firms to environment-harming oil companies, many of the best returns seemingly come at a cost to society.
However, an increasing amount of people are demanding more from their money. Not just profit, but also purpose. No longer are people merely happy to hand over their savings to an investment manager and turn a blind eye to the types of companies being invested in. They want to know that their investments are being used for good or at least do no harm.
Advisers are now recommending funds to their clients that specifically focus on responsible investing, while large pension funds and insurers are taking a similar approach. No longer is sustainable investing seen as mere green window-dressing to a wider investment portfolio. It’s taking centre-stage.
As a growing number of advisers, pension funds and insurers start to award new business exclusively to asset managers with a responsible focus, we review how to make responsible investing work the way investors want it to
How do advisers make sure that their clients get portfolios that reflect their concerns? Andy Willemite, Head of Investment Research at Heron House, says that it’s essential to thoroughly investigate with clients what they’re looking for from their portfolios. “Firstly, we discuss the client’s personal preferences and views, which should direct the discussion towards the type of ‘ESG’ or ethical holdings that should be appropriate for them,” he says.
Willemite says that they then go through the different types of approaches available to clients. He adds that there are a number of funds that could be used, including ESG funds, screened funds, and thematic funds. (To see definitions of sustainable investing click here).
“Certain funds can have much stricter criteria than others,” Willemite adds. “There are many funds with quite a light ESG overlay. ”Hortense Bioy, Director, Passive Strategies and Sustainability Research at Morningstar, says that how ESG investing is explained to clients depends on who they are: “That’s the thing with ESG,” she says. “It means different things to different people. There’s no standard definition. The question should be more: what do you want to do? What are your preferences? Some clients will just want a conventional fund and to make sure the investment manager is an active owner who votes and engages with companies to improve ESG practices.”
“We will recommend completely ethically screened portfolios for some clients if that is their preference, but also include a combination of ethical and non-ethical funds for many clients."
Willemite says that there are typically three types of investor that look at ESG: those with strong ethical views, others that want to avoid certain sectors or companies, and then ones that like the idea of sustainable investing. “We have a number of clients who have worked in industries such as healthcare, environmental sciences and agriculture and, as result, they tend to have strong views on these industries,” he says. “In general, our clients like the idea of investing into sustainable investment themes, for example, renewable energy or healthcare. I would say that for many of our younger clients this is becoming increasingly important."
Bioy adds that many investors are concerned with environmental issues, and therefore oil companies are no longer an attractive opportunity. “Increasingly, fossil fuels are an area that more investors are thinking about and divest from, in both the institutional world and the retail world, maybe for different reasons. From a risk perspective, this is a question that’s coming up more and more.”
Others just want to make a difference with their money. “You have those clients who really want to make a positive impact on the world. They want their money to be allocated to companies that deserve it and potentially focus on a theme. For example, companies that are managing their carbon exposure better than others or companies that are more diverse and focus on gender balance. Or they want to invest in certain sectors, like renewable energy.”
Many investors, unfortunately, like the idea of responsible investing but aren’t entirely sure of how to go about it. Bioy says: “Really, the question is what does the investor want? The problem is that a lot of investors don’t know what they want! And then when they do, the next challenge is to find the investment products that match their preferences. Many retail investors are disappointed by the type of companies they see in funds that claim to be responsible or sustainable. Financial advisers play an important role in educating investors and managing their expectations."
Knowing what investors want
While ‘alternatives’ covers a diverse range of assets, they may have certain characteristics in common. A 2018 paper published by CAIA Association and the CFA Institute Research Foundation, Alternative Investments: A Primer for Investment Professionals, outlines three primary attributes of alternatives, any of which can lead an asset to be classified as ‘alternative’:
Characteristics of alternatives
Alternatives offer a number of benefits that may be attractive to investors in the current market. For one thing, the relatively low correlation to fixed income and equities means that this sector can bring diversification benefits. The asset class can also provide some degree of inflation protection if returns rise in line with inflation – as is the case for some infrastructure assets. Returns can be attractive, and alternatives can play a part in managing volatility within the portfolio.
“Diversification is the key reason you’d add alternatives,” comments Yearsley. “It could be risk reduction, but it could be to increase risk – risk is determined by what you're intending to invest in. It could also be to increase returns through an investment into higher risk asset classes such as private equity.”
Tambe agrees that diversification is the overarching goal of incorporating alternative investments into a portfolio. This means “adding in different return drivers that you hope will be less correlated to equities and bonds so that risk is reduced without sacrificing long-term return” – a goal that Tambe says is the ‘holy grail’ for multi-asset managers.
Morningstar’s Möttölä says that while alternative funds can play a role as a return enhancer, “in the European market it’s fairly rare to see funds which use aggressive strategies to reach double-digit returns year-over-year. Rather, alternative funds can provide a reasonable level of return while having moderate or little correlation with equity and bond markets.”
1. Returns are driven by exposures to underlying assets with non-traditional cash
flows – “that is, cash flows that are not highly correlated with those that underlie
traditional stocks and bonds.”
The report notes that in all of these cases, specialised methods of analysis are needed as returns do not mimic the returns of traditional asset classes – i.e. stocks and bonds.
Why use alternatives?
2. The returns of the investment are driven by complex trading strategies which
result in “unusual risk exposures”.
3. Returns are structured to “generate non-traditional payouts”.
Beyond the primary goals of diversification and reasonable return, Tambe says that other secondary goals also have a role to play when selecting individual alternative assets. These can include considerations such as whether assets are performance enhancing – “e.g. they take away some portfolio volatility because of the lack of correlation but still take significant risk to achieve high returns”. Or risk reduction can be achieved by including very defensive assets, often negatively correlated to traditional assets, so that capital is preserved in “bad markets”.
Tambe adds, “The second goal is extremely important and often overlooked by many investors who can forget that in times of high market stress most previously uncorrelated assets can all fall together, but negatively correlated assets can hold up.”
Absolute return funds – which often set out to deliver positive returns in all market conditions –
are included under the heading of alternatives (and may invest in alternative assets themselves). However, returns are not guaranteed and the sector often attracts controversy. In light of concerns about performance and complexity, how much appeal does the absolute return sector hold in the current market?
Tambe says this is a sector that can provide useful exposures, “whatever your views on markets”, noting that with heightened volatility and larger spreads between the most expensive and cheapest stocks, “if momentum doesn’t break out either upwards or downwards then there could be more room for fundamental equity long/short managers to separate the winners from the losers.” However, he warns that there is also more risk of getting this wrong, “so manager selection is important.”
Tambe says that another potentially interesting area is that of defined return investments – in other words, assets which are typically held to maturity to lock in a yield. If markets were to start trending downwards, and if a crisis were to be on the horizon, “then allocating to more defensive assets is wiser” – an outcome which he says could benefit equity market-neutral or global macro managers, as well as absolute return fixed income managers playing on longer duration and widening credit spreads.
However, some are cautious when it comes to the overall benefits of the absolute return sector in the current market. Shore Financial Planning’s Yearsley says the simple answer is, “No, I wouldn’t buy most funds as they have failed to deliver on the crucial aspect – namely delivering an absolute return in most market environments.”
Similar concerns have been expressed about alternatives as a whole. “The returns of alternative funds have not lived up to expectations,” comments Möttölä. “Many investors have bought them often to replace fixed-income investments, which yield very little, but the expected returns of alternatives have not materialised in many cases.”
He notes that such funds do provide diversification benefits, and that a reasonably priced alternative fund with a strong manager and proven process can be a good fit to a portfolio – “but it’s important to understand the manager’s strategy to understand what you can realistically expect from the fund.”
It is clear that alternatives are not without their challenges, and the associated complexity and lower level of regulatory oversight is a concern for some. Consequently, it is particularly important to understand the performance of different asset classes and the implications of market developments.
But despite this caution, alternatives continue to be widely used, with robust growth expected in the coming years. The Prequin report predicts that by 2023, 34,000 fund management firms will be active in this space – 21% more than in 2018. Meanwhile, a report published in 2018 by Context Capital Partners found that more than half of the European investors surveyed planned to increase their net positions in alternative investments by the end of the year.
In the current market, the diversification offered by this sector does have an important role to play. Factors such as the prospect of rising bond yields, market volatility and the risk of an equities bubble may increase the appeal of uncorrelated assets. Likewise, increased regulatory oversight and a growing emphasis on sustainable and responsible investing by investors and fund managers may heighten the appeal of alternatives in the coming years.
As Andrew Moylan, Global Head of Product Management at Prequin, states in the 2018 report: “Quite simply, most investors could not hope to meet their return expectations without alternative assets.”
Moving on up
Issues relating to the quality and functioning of the natural environment and natural systems, such as carbon emissions, environmental regulations and waste.
What are E, S and G?
Photos by Ethan McArthur, Guillaume Jaillet, Adam Morse and Jason Blackeye on Unsplash
Infrastructure - from airports to renewable energy - is a mainstay sub asset class in many of the world's alternatives funds
The rise of alternative investments
weighing up the options
Why are investors turning to alternative assets?
Architas’ spring roadshow:
Looking under the bonnet
hy do people invest? The answer, at least traditionally, seems obvious. To make money. There are various nuances. Generating a quick return, saving for retirement, getting better rates than merely holding cash. The primary objective, however, is profit.
Source: Nandini Ramakrishnan, Global Market Strategist, JP Morgan
Issues relating to the rights, well-being and interests of people and communities, such as labour management, health & safety and product safety.
Issues relating to the management and oversight of companies and other investee entities, such as board composition, ownership, shareholder rights and pay.
One of the concerns that many investors have had in the past about sustainable investing is that it doesn’t deliver the sorts of returns that traditional investments will. However, according to Willemite, many sustainable investments deliver similar returns over the medium to long term.
“We run sustainable portfolios as well as mainstream non-sustainable portfolios and the performance over the medium to long term of say five years plus has been comparable. There tend to be periods where sustainable screened funds underperform, if for example oil sees an uplift in value, but the opposite of this is also true.”
He adds that ethical investors are now spoilt for choice and so it should be quite easy to build a diversified portfolio that delivers decent returns. “There are hundreds of ESG or sustainable funds available and many investment houses have ESG policies which are employed across the majority of their funds. This level of availability means, in our opinion, that it is possible to create well diversified, robust sustainable portfolios with strong growth potential.”
Does ESG mean compromise?
1. Negative/exclusionary screening
2. Positive/best-in-class screening
3. Norms-based screening
4. ESG integration
5. Sustainability themed investing
6. Impact/community investing
7. Corporate engagement and shareholder action
Sustainable investment encompasses the following activities and strategies
Source: The Global Sustainable Investment Alliance (GSIA) S&P Global
majority of clients are now interested in sustainable investments, a new survey reveals, with 72% of financial advisers now offering such options. The research found that 69% of advisers are now directly asking about sustainable investing in their fact finding. According to the
We take a look at the results of Professional Adviser’s recent survey on sustainable investing among advisers and paraplanners
Ten years on from the global financial crisis, it’s possible we’ve seen much of this market cycle’s best returns already. Given this, we believe the case is compelling for diversifying into assets that can provide portfolios with downside protection but that also have the potential to provide positive returns.
A bruising October for equity markets, followed by continued volatility in November and December brought investors in higher risk assets back down to earth with a bump despite the rally we have seen so far in 2019. As people seek out different avenues to find a return, we see real assets as being an area that has particularly strong potential for investors to diversify into.
This is not to dismiss other areas of alternatives, but we think having exposure to a combination of real assets that have low beta, low correlation and limited drawdowns makes sense in this market environment.
This sector comprises a wide array of investments linked to tangible assets. These range from social infrastructure funds that invest in street lighting and schools, to specialist property funds that operate in areas such as primary healthcare facilities and large-scale logistics centres.
Real assets tend to be typified by a long-term investment horizon with steady cash flows. Another important aspect is that many assets can provide protection from the corrosive effects of higher inflation, while others can guard against rising interest rates, to maintain the real value of the asset.
Currently, rising rates combined with a decelerating global growth outlook are proving a headwind for many areas of fixed income that investors typically look towards to provide protection from volatile equity markets. Real assets are a potential alternative solution in this market environment.
Of the financial advisers who still express concern about the effects of sustainable investments on returns, the majority cited limited investment options rather than performance per se as the main cause for reticence.
Some advisers responding to the survey said they still felt sustainable investing meant compromising on performance in certain circumstances. “It’s thematic and so will increase and decrease returns depending on if it’s favourable at that time,” one adviser said. “But it will often increase risk, and therefore be more likely to decrease allocations elsewhere, which will in turn decrease returns.” Another adviser said higher risk and volatility could yield positive returns, despite a more limited field.
However, the survey reveals an age and income gap when it comes to interest in sustainable investments. According to the survey, 43% of advisers said that clients over the age of 60 years old were interested in sustainable and ethical investments.
Figures also reveal a drop off in reported interest when it comes to high net worth clients between the ages of 40 and 60, with 51% of advisers saying such clients interested in sustainable investments - a significant drop from lower earning clients in the same age group, where 64% of advisers said clients were interested in such investments.
The drop-off in interest could be related to access to information on a changing investment landscape. A majority – 68% – of advisers who responded to the survey now ask clients about sustainable investing and personal values during fact finds and many reportedly do so as a way to introduce ESG into the conversation “to ascertain if the investor has any preference for ESG funds, to ensure we are considering a solution aligned with their interests.”
Asking the right question is important when it comes to sustainable investing, according to responding advisers. However, some advisers who responded to the survey reported only talking about sustainable investment options when prompted by clients. “We rely on the clients themselves bringing this up if they have any strong beliefs in this area,” said one.
Funds in this space tend to invest directly in privately held businesses. They look to take controlling stakes in firms with strong growth potential, aiming to benefit as they scale up and increase turnover, before then going public. Some big names that have benefited from private equity funding include Uber, which currently has plans for an initial public offering (IPO).
The private nature of these businesses can create opportunities for managers to identify mis-pricing. The more hands-on nature of this type of investing can result in value creation that may not be possible from owning publicly-listed stocks.
However, private companies may be smaller and less diversified than public companies, so they have the potential to be more sensitive to an economic downturn.
Everyone wants their investment to grow in the long term, but there are some other key performance characteristics to consider when seeking an alternative investment.
Key factors to consider
The relationship between each asset class and the broader stock market is a key factor when looking for portfolio diversifiers.
Given that the real assets sector is so broad, we have used property and infrastructure as examples, as they are two of the larger real assets sectors. The IA OE UK Direct Property sector includes commercial property as well as more specialist areas like student accommodation and healthcare assets.
For absolute return funds we have highlighted three UAI (UCITS Alternative index) peer group averages to represent three of the most popular types of absolute return fund.
Using the S&P 500 as the reference market, the UK property market has been almost completely uncorrelated over the past 10 years. Other assets demonstrate higher, yet still fairly low levels of correlation.
An additional factor to be aware of is that alternatives in general, but more specifically real assets, can be more illiquid, i.e. at times they can be harder to sell at a fair price than some other major asset classes.
However, as long as you maintain a long-term investment horizon – something we believe is key to investing – and you have other more liquid assets within the portfolio, then it’s a factor to be aware of, but not scared of.
IA OE UK Direct Property -0.01
Morningstar IT SS: Infrastructure 0.24
Morningstar IT Private Equity 0.48
UAI Event-Driven TR 0.54
UAI Macro TR 0.62
UAI Long/Short Equity TR 0.66
Beta is a useful measure to observe alongside correlation. We see investments with low beta – essentially those with lower levels of sensitivity to stock market movements – as a smart area to be in at the moment given the spike in volatility we’ve seen in equity markets recently.
Taking a look at the ten-year beta figures for sector averages, with the S&P 500 used as the
reference market, we see some quite different results, with both areas of real assets having the
two lowest readings.
IA OE UK Direct Property 0.31
Morningstar IT SS: Infrastructure 0.43
UAI Event-Driven TR 0.53
UAI Macro TR 0.55
UAI Long/Short Equity TR 0.67
Morningstar IT Private Equity 0.97
Downside protection is another important feature of alternatives. The table below shows the maximum peak to trough percentage decline of each sector average over the last 10 years, to the end of 2018.
IA OE UK Direct Property -7.91%
UAI Long/Short Equity TR -16.30%
UAI Macro TR -18.65%
Morningstar IT SS: Infrastructure -18.71%
Morningstar IT Private Equity -20.87%
UAI Event-Driven TR -23.41%
Past performance is not a guide to future performance. The value of your client’s investment can go down as well as up and they may not get back what they originally invested.
Professional Adviser’s survey of 150 financial advisers on sustainable investing, up to 62% of clients aged 40-60 expressed an interest in sustainable and responsible investment. In addition, close to one in two high net-worth individuals asked about environmental, social and corporate governance (ESG) investment options.
Interest in ESG investments has grown recently as climate change and sustainability become a part of the news. This class of investments seeks positive returns and long-term positive impact on society, the environment and the performance of the business and is now very much a part of the industry lexicon.
There is no widely accepted single definition of sustainable investing but according to the Global Sustainable Investment Alliance (GSIA) it can encompass seven main activities. These are ESG integration, sustainability themed investing, norms-based screening, positive best-in-class screening, negative/exclusionary screening, corporate engagement and shareholder action, and impact/community investing.
This is a broad set of activities and it can involve putting a special value on companies that manage their carbon footprints, ensure labour laws are upheld throughout the value chain, and many other social and environmental benefits. In fact, nine out of ten advisers surveyed by Professional Adviser said that clients who invest in sustainable funds cite environmental or societal concerns as their main objective. Only 2% of advisers said they thought clients chose these investments searching for higher returns.
What is your job title?
How interested in sustainable and responsible investing are your clients?
Niche no more
The rise of sustainable investing has accelerated over the last 15 years. When in 2005 a study coined the term ESG, the consensus was that sustainable investing was a niche interest – often interested clients would need to seek out specialised advisers. As the public conversation around climate change shifted over the years, sustainability came to be seen as less of a fringe issue. Indeed, much of the investment industry is coming to consider sustainable investing as a marker of the financial health of a portfolio. Today, there is perhaps some enduring concern that prioritising sustainable investments will negatively affect financial performance, but this concern is lessening.
The survey clearly shows that there is both an appetite for more sustainable investment options from clients, and a genuine interest in offering more sustainable and ethical investment opportunities from advisers. However, there is still a lot of practical legwork to be done to ensure that sustainable investing is the natural option: clearer information on the definition of sustainable investing and better reporting about the positive impact it can have on portfolios are the clear first steps. If advisers commit to spread the good news of sustainable investing, a widespread cultural shift in the industry will likely follow.
It can be argued that investment advisers have been slow to adopt the sustainability ethos for fear it might impact returns and limit options. However, the tides appear to have shifted as the majority – 68% – of respondents to the survey did not believe sustainable investing means compromising on performance.
Advisers responding to the survey argued that while a focus on ESG might mean more limited options, the quality of investments often made up for it. One respondent added that the number of choices has grown: “The ethical label has expanded to more than ESG and this opens a much broader investment world.”
What’s the approximate figure for your firm’s total assets under advice?
What would you say is the main objective of your clients who invest in ESG?*
Do you include ESG/personal values related questions in your fact find?
Do you offer ESG products to help your clients meet their investment objectives?
of advisers surveyed do not believe sustainable investing means compromising on performance
advisers surveyed said that clients who invest in sustainable funds cite environmental or societal concerns as their main objective
A majority – 68% – of advisers who responded to the survey now ask clients about sustainable investing and personal values during fact finds
Photo by Dan Dealmeida on Unsplash
advisers think of sustainability?
How can advisers respond to the increased interest in sustainable investing? Architas' Frank Potaczek helps us interpret the results of the Professional Adviser survey
Do you think advisers and their clients are enthusiastic about sustainable investing?
If you’d asked me as little as 12 months ago, I might have said it’s only for niche clients. But a change has come, particularly over the past 12 months, not because of the hype that you see in the trade press but because everyone is talking about sustainable investing: look at single-use straws, plastic cups, the BBC’s Blue Planet and plastics in the ocean, VW emissions scandals – and now Greta Thunberg presenting to a multi-party parliamentary meeting and becoming Time's Person of the Year.”
It underlines the need for education, not only for consumers but for advisers. The term ESG is something that’s come from the institutional investment industry. If I went to my kids’ school and said "Are you interested in ESG?" they’ll say “What are you talking about?” If I said "Are you interested in sustainable investing?" then you get, "Okay, tell me more." So, I’m not disappointed: I would welcome more education and for the industry to understand the importance of the language that we use.
90% of respondents said either that they had no questions from clients on ESG or under 10% of their clients were asking questions. Is this disappointing?
Avni: Yes, we’re expecting market volatility to continue and sub-asset classes like asset leasing, specialist property, gold, anything with low beta sensitivity, could help cushion investors against this.
Jon: Renewable infrastructure is another sub-asset class that has performed well. Lots of the underlying subsidies are linked to inflation; things like wind farms and solar energy. These subsidiaries tend not to get impacted by what's happening in the equity and bond markets. When we screen and select investments in the alternatives space, one of our key criteria is the correlation and how strong that relationship is to equities or bonds.
There is a massive range of opportunities out there for UK investors. You've got maybe 2,500 alternative funds to choose from so it's a challenge to get the right mix.
Do you think diversification cushions investors against market volatility?
Avni: It has been designed to provide diversification to a more traditional portfolio, through the use of asset classes with a low correlation to the equity and fixed income market. It also has the potential to provide some level of inflation protection and some steady income.
Jon: The fund also gives a diversified exposure to a range of liquid alternatives. That gives you a low correlation, or low sensitivity, to what's going on in bonds and equities. On top of the capital return, you've got a steady income of circa 3 to 3.5% each year. And then lastly, especially for those people in retirement, it's that inflation protection element.
What is the Architas Diversified Real Assets Fund designed to do?
Jon: In terms of the output, the overall portfolio volatility is nice and low. So, if you're going to put a figure on that, since our fund was launched, it's just under 3.5% on an annualised basis. That might be a third of the volatility of the equity market, something like that, so it's designed for that 'steady eddy' return. It's not going to be up 15%-20% each year, but it's a portfolio that will aim to give you long-term steady returns against a backdrop and an environment where things are a lot more uncertain.
Trade deals with the US and China, the global slowdown; we've seen some massive movements either way in the markets. So not all investors want to have exposure to that. They want to have something which is what we'd call a volatility dampener.
What sort of diversification benefits do alternatives provide to the Architas Diversified Real Assets portfolio?
Jon: I mentioned there being 2,500 available investments in the alternative space, but some of those investments have been repackaged from vehicles that were previously designed only for institutional investors. So, within that, we would argue some of those just aren't suitable for retail investors in terms of their liquidity profile.
Avni: When you mention alternatives, people do say: ‘what about the liquidity, it's a concern.’ We have around 90% of the fund in daily dealing holdings and we have a separate risk management team that report directly to the CEO so there's no mixing of investment management and risk management, which helps to remove any conflict of interest.
We've got over 30 positions within the portfolio so we're not concentrated in any one area. It's a mix of managing the liquidity profile, not having too much concentration, and then also having that overlay of risk management within the business, which is really around how you look at the profile, how you manage it and who you flag it to.
What key risk parameters does the fund identify and how are you mitigating them?
Jon: The return profile in alternatives is completely different to what you experience in bonds and equities. They have different drivers, whether it be things like asset backed securities or infrastructure programmes, and they're not driven by the broader market sentiment.
That's why you have them in a portfolio. Overall an alternatives portfolio can be constructed so it is not at the mercy of rate rise speculation, like most asset classes were in 2018.
The Architas Diversified Real Assets fund has around 80% exposure to inflation sensitive assets so as inflation goes up, your returns should go up. Lots of the underlying income streams are linked to RPI and CPI. And what’s more you don't have the duration of, say, a bond fund which is one of the things that hurt fixed income investors in 2018.
Have the returns in the alternatives space come down in line with yields in more traditional asset classes?
Past performance is not a guide to future performance. The value of your client’s investment and the income derived from them can go down as well as up and they may not get back what they originally invested
The shift away from single-use straws is just one of the changes happening as a result of sustainability concerns
Multi-Asset Product Specialist,
In 2008 about 5%
of a managed fund's allocation was in the
alternative space; in
2017 it was closer
Around 62% of advisers now think investors aged 40-60 are moderately interested in ESG. Does this show that ESG isn't just a concern of younger generations?
I would go beyond that. My mother is widowed but retired and wants to invest money for her grandchildren. Not an awful lot but she wants to make sure there is a sustainable world for her grandchildren to inherit. That’s why the whole nuance of “the millennial” has been changed towards “millennial values”. My mother has millennial values. Remember that when Fair Trade was introduced back in the early 1980s, it was just for the fringe. Now, it is front and centre.
Many advisers (68%) now include ESG/personal values related questions in their fact find. But are advisers collecting the right information to steer investors towards the right funds?
A hard core of advisers have been doing this for a long time so they can help specialised client groups such as specific religious groups and affinity members. They have the tools. But a lot of advisers have only just had to start thinking about sustainability due diligence, and how to pick and combine funds together to derive a particular outcome. We understand, as fund pickers ourselves, that it’s hard to create a process to pick the right funds, to create a portfolio of all the different approaches to sustainable investing, and still maintain a good outcome for clients.
Should investors pursue sustainability as a broad theme or pursue specialist agendas?
A small section of purists will want their portfolios to be really climate change impacting or address specific issues that they care about. But if you are looking at the mainstream, most people simply want the feeling that the money is doing good. We feel they are happy to outsource the more specialist decisions to their asset manager. As a fund of funds provider, we can then engage with the fund managers to say okay, our clients demand a portfolio that is either engaging with the “naughty” companies who are polluting the planet to encourage them to clean up their act, or engaging with the people who are at the forefront of renewable resources, or making sure that there is diversity on boards, and so on.
About two-thirds of advisers think that ESG doesn’t involve compromising on performance; does that make you feel optimistic?
Very optimistic. There are a number of academic studies that suggest you are not necessarily missing out on performance if you target socially responsible themes. One of the latest studies was from MSCI and published in the Journal of Portfolio Management in July 2018. It basically says that there is a link between ESG characteristics and performance and risk. You can get good performance from avoiding losers as well as by buying winners. And investors might have protected themselves from negative ESG incidents in companies like BP, VW, Facebook, Uber and Experian, with the appropriate screens.
The most commonplace standard is provided by the Global Sustainable Investment Alliance (GSIA). They've introduced a definition of sustainable and responsible investing which lists seven different activities.(1) ESG is simply one of the seven (To see the full list click here).
Another interesting contribution is the United Nations Sustainable Development Goals (UNSDGs).(2) Here you have 17 themes, all colour coded: gender equality, life on land, life below water, sustainable cities and communities, no poverty, to name but a few. A lot of asset managers are coalescing around the UNSDGs. We tested the graphics with end-investors and it really helped with tangibility and understanding.
It would be great to use the SDGs as a way of showing people where their money has gone and the things they're looking to – for want of a better phrase – impact or cure. We can start to capture the imagination of end-investors. A particular fund in our portfolio, for example, might be able to say that 7% of the fund is related to SDG number six, which is clean water and sanitation. We could even follow the colour coding to help clients understand the social development goal that has been achieved.
What are the key industry moves to standardise sustainable investing goals?
I was involved in the 1990s with an ethical fund, when ethical was really the FTSE 350 index with all the naughty stocks taken out. That was it. I'm the typical adviser demographic, and we all grew up on exclusion factors. Some 25, 30 years later we’ve learned that to get the right outcomes you need to engage, e.g. with the fossil fuel companies to get them to change from being oil and gas companies to renewable energy companies. My generation has had to alter our view from exclusionary to engagement.
How has sustainable investing changed in two decades?
Head of UK Proposition,
Whether they are investment advisers, run model portfolios or outsource, advisers want to understand this new marketplace.
Sources: (1)See Sustainable Investing Defined, Global Sustainable Investment Alliance, 2018 Global Sustainable Investment Review, p.7, available at http://bit.ly/2Jz5104. (2)The 17 United Nations Sustainable Development Goals are fully described at http://bit.ly/2WBuwmU.
Advisers who associated ESG with compromised performance often said this performance was inevitable because ESG limits the investable universe. Is that so?
On face value, it does seem logical. However, if you look at how funds are picked anyway, there are something like 9,000 funds that we as multi-managers can pick from. So, we have various filters to narrow that down to a manageable range of, say, 500 funds that we want to invest in. Really, ESG is just another filter to narrow down that investable universe.
What three things should the industry do for advisers and investors?
The first one is to help advisers educate themselves. Whether they are investment advisers, run model portfolios or outsource, advisers want to understand this new marketplace.
The second is to help advisers talk about sustainability with their clients, including what sustainability means in pure investment terms. Take the emotion out, look at what the data is saying, and share that data, e.g. to show that on average you may well not miss out – though obviously you will have good and bad performers and various sectors.
The third is to coalesce around agreed standards. The big fund groups are still arguing about definitions. As a multi-manager, that can suit us because it gives us a role providing simplicity for our advisers and for their clients. But eventually there will have to be some standards.
Finally, what big-picture trend stands out from the survey results?
I was very pleased that there were a lot of advisers that are very positive about ESG and investing sustainably. It shows the direction of travel. Yes, a lot of advisers still need convincing that this is a mainstream investment type. But had this survey been done two or three years ago, I don’t think nearly as many advisers would have been so on point.
1. Negative/exclusionary screening
2. Positive/best-in-class screening
3. Norms-based screening
4. ESG integration
5. Sustainability themed investing
6. Impact/community investing
7. Corporate engagement and shareholder action
What are the views of some leading financial advisers on why sustainable investing is here to stay
Alternatives is a catch-all term for any investment that doesn’t fit into the traditional buckets of equities, bonds or cash. So it covers a wide range of investments including property, commodities, infrastructure, private equity and absolute return funds.
The goal of adding these assets to a portfolio can be to reduce volatility or enhance returns. It really depends on the investor's perspective but generally the common aim is to improve diversification within a portfolio. Alongside this, some investors will look to alternatives as a different source of income or a way to add inflation protection within the portfolio.
While alternatives can be a great diversifier they still carry
risk. For any sort of return, investors have to understand the
potential for loss.
In the case of alternatives that risk will be different to the risk
they face in their equity and bond investments but it’s something
that investors need to understand. Alternatives are generally
not that widely covered by the mainstream press so investors
need to go that bit deeper with their analysis in order to be comfortable with the investment.
Investors will want to look at the liquidity risk and also the
political risk and regulatory risk that can impact these types of alternative assets. In many cases property or infrastructure investments will have some impact on the general
publics’ lives and therefore can be subject to
changing regulatory and political winds. So it’s
something you need to be on top of as a source
Images from Architas World Market Review events
Senior Investment Manager, Architas
Investment Development Manager, Architas
The investing world has changed a lot since the days of building portfolios from cash, fixed interest, equities and property. In fact the weighting of alternatives in professional portfolios and the UK managed sector has increased significantly over the last ten years – from around 5-6% to 22-23%. Alternatives can be used by advisers to help them get greater diversification into the portfolio and at the same time give them some downside protection, plus reduce the maximum drawdowns that clients just don’t like to see.
“The problem for advisers from what they tell me is that typically the alternatives asset class has been a difficult area to research. So unlike looking at equity funds where you can review ratios such as alpha, beta and Sharpe etc., there’s much more due diligence to be done to find the right alternative asset fund. This may be one of the reasons that has driven many advisers to use absolute return – however, this is just one of the small sub-asset classes within alternatives."
We put our clients into a mixture of multi-asset, risk-adjusted portfolios but we do mainly run our own portfolios which include multi-asset funds.
Do you put your clients into model portfolios, multi-asset portfolios or other?
In a market short on diversity and returns do alternatives now have more appeal?
Aspire Wealth Limited
Alka Financial Services
Yes definitely. Over the last few years, to diversify our portfolios, we’ve used some of the multi-asset funds in order to get a reduction in the level of risk we’re taking for clients.We introduced alternatives into our model portfolios really as a diversifier away from asset classes like bonds and as a proxy for cash, certainly at the lower end of the risk scale.
How we look after client interests will depend on their individual circumstances so sometimes I use model portfolios but often, these days, it is multi-asset funds. Every client is unique so we audit their needs before making a recommendation.
Indeed. Alternatives have suddenly become a lot more focused in the last few years – things like aircraft leasing and different property vehicles are becoming more popular. I don’t see why they won’t continue to grow in popularity given the returns they’ve produced so far.
I tend to use a lot of model portfolios because they give good value to the clients and a lot of clients seem happy with them. Maybe that’s a bit boring but as long as the clients are happy, I’m happy.
Yes I think they do have more appeal because if you can give clients an alternative to what’s in the mainstream they find it helpful. At the end of the day, it’s about what the client chooses. We’ve got to try and give them what they’re looking for so, yes, I think alternatives do have a place today.
We put our clients in risk-rated multi asset portfolios which allows us to provide diversification and a risk managed solution.
Alternatives are appealing because traditional investments have been behaving strangely over the last couple of years. So they provide diversification and a good hedge, I think.
We use a combination of all three. Every client is different so it’s about making sure we don’t pigeonhole anybody.
Yes. We’ve been looking at alternatives for almost seven years now. Clients find them interesting. I monitor real assets and there are some interesting ideas out there like leasing aeroplanes. It’s certainly an exciting area for my clients.
CLICK ON IMAGES FOR DETAILS
nvironmental Social Governance (ESG) is a growing global theme and according to the Association of Investment Companies “more investors want their money to be invested in a sustainable way or in a way that makes a positive impact.”
Mark Mobius, joint manager of the Mobius Investment Trust, says ESG as part of a wider portfolio is a way to manage risk. He told the AIC(1): “First and foremost, taking ESG seriously means risk management. Companies that have good corporate governance and pay attention to the environment and social issues run less risk of becoming involved in scandals, having to pay fines or facing social problems.”
Mobius adds: “A recent study shows that companies implementing changes to environmental, social or governance standards following engagement from investors generated more than 7% of excess returns after 18 months. By taking ESG factors into account, investors can significantly reduce the risk profile of their investments, which over the long term not only translates into positive risk-adjusted returns, but also positively impacts all stakeholders.”
Source: (1) 'Is green the new black?' The Association of Investment Companies, March 2019
The head of ESG and sustainability at Partners Group, the investment manager of Princess Private Equity, believes that the integration of material ESG factors into the investment processes is a “core part of our duty” to act in the best interest of clients and their beneficiaries.
Creating value from ESG factors
A report by S&P Global, titled ‘The (Financial) Future Is Female’, found that in most of the markets surveyed, “women are more likely than men to weigh a company’s environmental and social impact when making investment or purchasing decisions.”
The report adds: “With women holding as much of the world’s total wealth as men, it seems clear that fund and asset managers’ increasing focus on ESG issues is here to stay.”
And there is traction in the baby boomer generation of investors. Julia Dreblow, founder of SRI Financial Services, says: “There are a lot of older investors who five, 10, 20 years ago weren’t interested in climate change and pollution, but now they understand that things are changing and they recognise what is happening to the planet, so we shouldn’t necessarily write off older investors.”
Who is investing in ESG?
Dennis Hall, director and CEO of Yellowtail Financial Planning, believes that sustainable investing is here to stay: “We have gone through various changes, various regulations, we have had all those changes to deal with. Now you have social media, TV programmes, there have been conversations about plastics pollution and global warming, it is now part of the daily conversation. And I think SRI’s time has come.”
Ricky Chan, director and chartered financial planner (CFP) at IFS Wealth & Pensions says: “Sustainable investing is still a niche but fast growing area. I’m a big fan of ESG funds and the positive contributions they have on society.
“They help to align clients’ desire to grow their investments with their values, so that profit isn’t gained at the expense of their, their children's or grandchildren’s future. Investments are typically channelled into worthwhile companies/organisations that fit clients' ethical aspirations and mandates.
“We have clients of all ages investing ethically, we tend to find an increasing appeal among younger/middle aged investors.“They usually have either read something about ethical investing already or are open to learning more about it during our meetings. This enables them to experience and connect the tangible benefits of investing with the intangible concepts of investing and retirement planning/pensions. Consequently, I find that this helps them become more engaged with their overall financial planning.”
A new mainstay
Past performance is not a guide to future performance. The value of your client's investment and the income derived from them can go down as well as up and they may not get back what they originally invested.
Buying and investment behaviour and environmental and social responsibility
Source: S&P Global
Adam Heltzer explains: “When it comes to managing ESG factors effectively, we believe private market investors have inherent corporate governance advantages compared to their public market peers, both in terms of mitigating ESG risks and creating value from ESG factors through targeted value creation initiatives.
“Our active, hands-on ownership model provides opportunities to work closely with portfolio companies to implement superior, sustainable investment strategies and enhance investment returns.”
Definitions: sustainable investing
Tap arrows view next
Architas’ Tom Woodfield and Sheldon MacDonald discuss the growth of the sustainable investing market, its biggest challenges, and how their new fund of funds can help investors do the right thing
Introducing the Architas Diversified Real Assets Fund
A Dynamic Planner Risk Rating of 4 (1)
An FE Risk
Score of 28 (2)
track record (3)
The Architas company and fund data for the Architas Diversified Real Assets Fund D Net Inc is provided by Architas as at 31 March 2019. Past performance is not a guide to future performance. The value of your client’s investment can go down as well as up and they may not get back what they originally invested.
(1) The Dynamic Planner Risk Rating as at 31 December
2018 is provided by Distribution Technology.
(2) The FE Risk Score is provided by FE Analytics as at
24 April 2019.
(3) Fund launch as at 5 August 2014.
(4) Assets under management and advice as at 31
over £496 million invested in
in inflation sensitive assets
37 underlying funds
Architas has £23
billion assets under management and
under advice (4)
20 investment professionals
16 sub-asset classes
Portfolio snapshot: emphasising diversification
Mayank Markanday, co-manager of the Architas Diversified Real Assets Fund,
discusses a key step when constructing an alternatives portfolio.“
One of the most important steps when constructing an alternatives portfolio is
liquidity. We view liquidity as an explicit objective and we manage it on an active
basis. In our DRA fund, 60% of the portfolio can be liquidated in one day and 100% of
the fund can be liquidated in five days if there is a need. So liquidity is something that myself and Solomon Nevins, the fund’s co-manager, look at on a daily basis when we invest in these underlying alternatives.
We have a separate team – a risk team – that also look at liquidity and they do that independently. Anytime there is a breach of liquidity, they are aware. So let’s say liquidity falls below a 50% level: they would notify us and we’d take appropriate action to keep that in line with the objective of the fund.”
Matching the liquidity profile to client needs
Some of the fund’s portfolio is invested in non-mainstream assets, which during periods of stressed market conditions may be difficult to sell at a fair price, which may in turn cause prices to fluctuate more sharply than usual.
Source: Architas, as at 31.12.2019. Please note data shown may not add up to 100% due to rounding and the allocations may change. Funds are grouped according to their primary asset class exposure. *The negative cash position relates to accrued underling expenses.
Portfolio snapshot: a view on performance
The investment team research and analyse thousands of funds to find the best combination of underlying funds to make up the investment portfolio. They carry out thorough analysis of the fund managers and how their funds have performed, as well as carrying out in-depth research on the asset class to find where the best opportunities are. When the Diversified Real Assets Fund managers have chosen a fund and added it to the portfolio, it will be regularly monitored to make sure it is performing as expected. If a fund does not perform as the investment team expect or if there is a significant change in how that fund is managed, the Diversified Real Assets Fund team will take the decision to replace the fund with a more suitable alternative. This is one of the benefits of Architas’ large team. The managers have effective processes to ensure underlying funds are closely monitored.
CUMULATIVE PERFORMANCE SINCE INCEPTION (5 AUGUST 2014)
Source of line chart and discrete performance: State Street, as at 31 March 2019. Performance of the Architas Diversified Real Assets Fund D Net Inc share class shown. All index data from Morningstar, at 31 March 2019. For performance prior to the launch of the D share class (1 December 2014), the track record of the A share class is used. Total return figures are calculated on a single pricing basis. Performance figures D Net Inc are shown in sterling unless otherwise specified. The fund performance figures take into account the annual management charges but not the initial charges or policy charges that would be payable, which will have the effect of reducing the past performance figures shown.
DISCRETE PERFORMANCE FOR PAST 5 YEARS
ESG analyst, Architas
Younger people especially are thinking: “How is the way I put my money to work impacting the real world?”
How fast is sustainable investing growing?
Tom: According to Morningstar(1), at the end of June 2019 sustainable funds had EUR 1.06 trillion under management, up from EUR 992.5 billion a year earlier, a 7% increase. Assets in non-sustainable funds grew just 2%, from EUR 9.82 trillion to EUR 9.97 trillion. A fair amount of that asset increase could be the rally we saw in the market but sustainable investing is growing and here to stay.
Source: (1) Morningstar Direct, Data as of 30 June 2019
What's driving that growth?
Tom: Many different drivers. On the institutional side, there's a recognition from asset owners that incorporating ESG into investment processes makes sense from a pure risk management perspective. The retail space has been slower but information travels so much quicker now with social media that there's just more awareness around environmental issues such as climate change, social movements, and company ethics. Younger people especially are thinking: “How is the way I put my money to work impacting the real world?”
Sheldon: Also, misconceptions are being broken down, such as that sustainable investing condemns the investor to underperformance. After a long period when investors couldn't perceive any bottom-line benefit, in the last couple of years, in some spaces, you've seen sustainable investments outperforming regular indices. Hard-nosed investors are sitting up and taking notice. And it’s not just younger investors: older investors are interested too, including those who want to tie into their grandchild's green sensitivities when leaving them money
How important might sustainable investing become within global retail investing in the next five years?
Sheldon: Very. I think in five years’ time, we won't be speaking about ESG integration because it will just be automatic, it will be assumed. Most funds out there will need an ESG policy, i.e., some sort of bottom-up incorporation of environmental, social, governance into their investment process
Tom: Unlike ESG integration, sustainable investing more broadly will still probably remain, in the next five years a significantly growing sector rather than becoming all-encompassing.
What can be done in terms of educating retail investors?
Tom: It starts with the financial advisers, who’ve been bombarded with different terms and buzzwords. The industry itself must agree on standardisation, through moves like the Investment Associations (IA) new Responsible Investment Framework, which helps articulate the different ways in which the industry carries out responsible investment approaches. That's the key starting point because once everyone is on the same page, you can start to get more consistent due diligence, which should feed into better outcomes.
How much time will it take the industry to develop a common language?
Tom: A lot of the proposals in the European Commission sustainable finance action plan are set to come into force at the end of 2020 or the beginning 2021, which gives an idea of the necessary timescales. However, the Investment Association Responsible Investment framework moved from consultation phase - which Architas participated in - to implementation phase within the space of a year. So it shows that this is something industry bodies are rightly prioritizing.
What is the biggest challenge to sustainable investing’s bright future – investor confusion or cynicism?
Sheldon: I come at it from an investment perspective and the big risk is that you see sustainable funds underperform. Investors might think that industry claims were all a lie, leading to something almost like a hedge fund crisis, with investors just giving up. It’s a risk because sustainable investment approaches can steer investors away from specific sectors such as oil.
Tom: In the recent past, there was also a real risk that anyone could just jump on the sustainable bandwagon and say anything they wanted, turning sustainable investing into a kind of Wild West. That risk is receding, given moves towards more regulation. Standardisation should further reduce the risk of 'greenwashing' (e.g making misleading claims about your environmental credentials).
Is sustainable investing already reaching a positive tipping point or will it take some further environmental crisis to send it into orbit?
Tom: You've already got the UK parliament declaring a climate change emergency; you've had the Extinction Rebellion protests. People are beginning to pressure governments to act. So for me the direction of travel is already set. As for further external tipping points, if we get to that stage, it's probably already too late!
So how will your new sustainable investing ‘fund of funds’ – The Architas Positive Future Fund – help retail investors take action?
Sheldon: We want this to be somebody's first step outside of a purely conventional investment. It could be an investor's only investment, so it aims to provide fairly broad multi-asset returns, akin to what you would get in a conventional multi-asset fund. But at the same time, it assures the investor that their money is doing some good, and I mean actively doing good – not simply negatively screening out 'bad' companies. So it will target some very specific themes, which may change over time, depending on sustainable investment opportunities.
Which of the various approaches to sustainable investing will your new fund of funds target?
Tom: The four areas we target are 1) positive, best-in-class screening approaches. That's where you screen investments in rather than excluding them. And then 2) investments where environmental, social, governance integration is key to the investment process; 3) where there's a sustainable thematic objective for the fund; and 4) where there's an impact investment objective as well. Funds that we consider for inclusion in the fund must cover at least one of those four bases.
Are there contradictions, e.g., could an impact investment have horrible governance?
Tom: That's why we have two strands to our approach. We include funds that have a sustainable investment objective, e.g., impact investing in our initial universe construction, but we also have an underlying environmental, social, governance analysis that I carry out within the investment team. This ESG analysis ensures that fund managers are also looking at how companies manage non-financial risks and opportunities through an ESG lens.
Sheldon: Meanwhile investment analysts look at the funds in terms of their investment benefits, goals, ambitions, strengths and weaknesses etc., so we can score an investment from a hard-nosed investment perspective. Tom might be saying “These guys are the best from an ESG persepctive" but the fund must also stack up from an investment perspective….
Was it easy to decide to launch a broad-based fund rather than one that targeted a specific approach, such as impact investing?
Sheldon: We had an interesting brainstorming session several months ago and one idea was to go down the building blocks route – we know investors can feel very passionate about specific issues. So let’s have a climate change fund, let’s have an empowerment and inclusivity fund, and so on – and then let investors choose which causes they’d like to support. This is something that we would consider for the future. For now, it’s premature because most investors haven’t quite determined what it is that they want.
So the idea of the Positive Future Fund is really to establish a beachhead. It’s designed to be as widely accessible as possible. We might miss out on people who want to focus on something very specific. But there’s a much broader group of people that just know they want their money to be doing some good.
Introducing the Architas Positive Future Fund
Deputy CIO, Architas
We have two strands to our investment approach. First, we review all funds with a sustainable investment objective to assess their team, process and performance. Our ESG specialists then carry out an environmental, social and governance analysis of the funds. We don’t simply take a fund or manager at face value, we need to make sure they are living by the values they have set themselves. If they don’t we will not invest in the fund. The four areas we are targeting with the Fund are: first, positive, best-in-class screening approaches. That's where we screen investments in based on strong ESG credentials rather than excluding them; second, investments where environmental, social, governance integration is key to the investment process; third, where there's a sustainable thematic objective for the fund; and finally where there's an impact investment objective as well. Funds that we consider for inclusion in the Fund must cover at least one of these four areas.
How is the new Architas Positive Future Fund providing investors with a vehicle for their sustainable ambitions?
The multi-manager Positive Future Fund is the first sustainable investment product from Architas. Using a blend of active and passive funds, this multi-manager fund invests globally across equity, fixed income and alternative funds, guided by the UN Sustainable Development Goals. The Fund is aimed at those investors who are looking for a return but also want to know their money is having a positive impact on society and the environment. At launch (August 2019) the fund had an AMC of 40bps and an OCF of 110bps. The Fund is managed by Deputy CIO Sheldon MacDonald and Senior Investment Manager Solomon Nevins.