FE has added a range of responsibly managed portfolios to FE Invest in response to increasing demand for sustainable and ethical investments.
The suite of risk-targeted portfolios will use the FE ratings system and proprietary technology to achieve diversification and suitable levels of volatility, overseen by a team of analysts.
To be included in the Responsibly Managed Portfolios, funds must have an active screening mandate; funds just considering sustainability issues within the investment process will not make the shortlist.
Charles Younes, research manager, says: “Financial advisers have seen a significant influx of client funds into sustainable investments in recent years and the investment strategy has grown 107.4 per cent annually since 2012.
“With the Government calling for such investments to be made more widely available, as well as growing demand from millennials who are in line to receive more than $30trn of inheritable wealth, we believe interest in responsible investments will soar in the next decade.”
He adds: “Sustainable and ethical managers can be exposed to similar biases due to the nature of the companies in which they invest. As such, selecting managers with different themes and approaches is key to maximising diversification. Our portfolios include a wide range of funds – from negatively screened funds that avoid companies investing in armaments, gambling, tobacco and so on, to positively screened funds which look to invest in companies making a positive impact.”
The Trojan Ethical Income fund and the EdenTree Amity UK fund are among those that have made the grade.
Sophie Meatyard, research assistant at FE, says: “Hugo Ure, manager of Trojan Ethical Income applies a negative screen to their investment universe. This screen results in 20 per cent of their investable universe being removed. The portfolio remains closely linked to the original Trojan Income fund and we expect the defensive nature of the fund to remain. The screens result in a tilt towards consumer goods and financials and away from energy.
She adds: “EdenTree Amity UK uses negative screens as well as seeking companies that make a positive contribution to society and the environment through sustainable and environmental practices. Due to the fund’s screens, the fund has a large allocation to small- and mid-sized companies, which could make investment riskier. EdenTree also has an external Amity Panel who ensure the ethical mandate remains the focus point.”