PortfolioMetrix Sustainable World
SRI Style:
Sustainable Style
SDR Labelling:
Not eligible to use label
Product:
DFM/Portfolio
Fund Region:
Global
Fund Asset Type:
Mixed Asset
Launch Date:
23/01/2017
Last Amended:
May 2023
Dialshifter (
):
Fund Size:
£139.80m
(as at: 31/03/2023)
Total Screened Themed SRI Assets:
£164.80m
Total Responsible Ownership Assets:
£1320.00m
Total Assets Under Management:
£1320.00m
Contact Us:
Objectives:
PotfolioMetrix Sustainable World portfolios are designed with a dual mandate:
- To help clients achieve their long-term financial goals
- Generate a positive impact on society and the environment
Sustainable, Responsible
&/or ESG Overview:
Awaiting update from DFM (June 2024)
The PortfolioMetrix Sustainable World portfolios have been developed to achieve positive social and environmental impact without sacrificing clients’ financial objectives.
To achieve this goal, the approach invests in funds that embrace Sustainability. In the context of Sustainable World portfolios, Sustainability means those funds who select companies that deliver a clear positive net benefit to society and the environment through the product / service provided and through their operations. Underlying funds often adopt a multi-thematic approach aligned to the UN’s Sustainable Development Goals as a framework to identify those companies. This approach typically leads to investments in companies providing solutions to sustainability challenges.
Further, underlying funds should exclude industries and specific companies with negative social or environmental impacts as well as seek to improve the corporate behaviour of investee companies via engagement.
Primary fund last amended:
May 2023
Information directly from fund manager.
Fund Filters
Sustainability - General
Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information.
Find funds which substantially focus on sustainability issues
Find funds where there is a significant emphasis on (environmental and social) sustainability. Funds with a 'sustainability theme' typically place more emphasis on the area than funds with a 'sustainability policy' - meaning that it is more likely to drive investment selection. Strategies vary. See fund information for further detail.
A core element of these funds aim to encourage higher sustainability standards across business practices through responsible ownership / stewardship / engagement / voting activity
Environmental - General
Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.
Funds that aim to invest in companies with strong or market leading environmental policies and practices. Strategies vary - in particular the balance between 'financial' aspects and environmental benefits. Some may invest substantially in solutions or 'positive impact' companies - others may invest in more conventional companies providing certain environmental criteria are met. See fund information for further detail.
Climate Change & Energy
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity
Funds that hold companies in the clean energy and renewable energy sectors (at the time research was supplied). Fund strategies vary, in particular the proportion of investment in these areas may vary significantly. Check fund literature for details.
Social / Employment
Find funds that have policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). Funds with social policies typically avoid companies with low standards or work to encourage higher standards. See fund information for detail.
Ethical Values Led Exclusions
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.
Meeting Peoples' Basic Needs
Find funds that invest more than 50% in social housing or similar assets.
Find funds that invest in ‘social bonds’ which raise funds for the purpose of financing projects with positive social (people related) outcomes.
Find funds that invests more than 50% in social bonds which raise funds for the purpose of financing projects with positive social (people related) outcomes.
Governance & Management
Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary. See fund literature for further information.
A core element of these funds will aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity
Fund Governance
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature.
Asset Size
Find a fund that invests in a combination of small, medium and larger (potentially multinational)companies.
International entities or bodies with agreed remits that are broadly similar to those that may otherwise be undertaken by individual governments eg the UN
Targeted Positive Investments
Invests in loan stock that is exclusively used to finance environmental and social projects. See ICMA Sustainable Bond Guidelines.
Invests in loan stock that is supporting or enabling the shift towards a cleaner, more sustainable future. Strategies vary significantly and may or may not be linked to specific outcomes.
Invests in assets that focus on improving the marine environment – for both wildlife and the people whose livelihoods directly depend on it.
Find funds that invest in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area.
Find funds that invest more than 50% in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area.
Impact Methodologies
Funds that aim to help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information.
Find funds that specifically set out to help deliver positive environmental impacts, benefits or 'real world' outcomes.
Find funds that specifically state that they aim to deliver positive social (i.e. people related) impacts and/or outcomes.
Find funds that direct investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Find funds that invest in companies where a major part of their business is specifically aimed at helping to address social challenges. e.g. companies helping to address poverty.
Find funds that specifically set out to invest in companies that are regarded as 'disrupting' existing business practices - typically through the development of innovative (sustainability aware) products and/or practices.
Fund aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
50% of fund assets are regarded by the fund manager as being significantly focused on providing solutions to environmental or social challenges. Strategies vary.
How The Fund Works
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
See fund information for different risk options of this fund strategy
Unscreened Assets & Cash
All assets held in the fund - except cash - meet the sustainability criteria published in fund documentation.
Intended Clients & Product Options
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.
Finds funds designed to meet the needs of individual investors with an interest in ‘Impact investment funds’ which help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information.
Find funds that are available via a tax efficient ISA product wrapper.
Only applicable for DFM’s & portfolio providers. Finds those that offer an SRI / ESG portfolio option
Only applicable for DFM’s & portfolio providers. Find service providers who offer multiple SRI / ESG portfolio options
Only applicable for DFM’s & portfolio providers. Find service providers who offer bespoke ('personalised') SRI / ESG portfolio options
Fund Management Company Information
About The Business
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Find funds run by fund managers that apply Responsible ownership or 'Stewardship' policies to all or most of their investment assets. This means active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
Collaborations & Affiliations
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association
Transparency
Find fund management companies that will supply information about their sustainable and responsible investment activity on request.
Sustainable, Responsible &/or ESG Policy:
Responsible investing is at the centre of all portfolios constructed by PortfolioMetrix, as we firmly believe environmental, social and governance considerations are a crucial part of maximising long-term risk adjusted returns. Sustainable World portfolios are constructed in the same risk controlled manner as all PortfolioMetrix portfolios: starting from asset allocation and building up to fund selection, adhering to the same Stewardship and ESG Integration applicable to all PortfolioMetrix portfolios, but take sustainability a step further, by only investing in funds that put sustainability at the heart of the investment process.
Sustainable World portfolios focus on funds that embrace positive screening, as we believe that by focusing on companies that are contributing positively to society and the environment, not only to do you avoid those having a negative impact, but you are also actively supporting those making a positive contribution - which in the long-run, is more beneficial to society. As a result, the majority of holdings in Sustainable World portfolios are either:
- Sustainability Focused: Investments chosen on the basis of their economic activities (what they produce and the services they deliver) and on their business conduct (how they deliver their products and services)
- Impact Funds: Investments made with the intention to generation positive, measurable social and environmental impact alongside financial returns.
The exact specifics of the positive screens vary from fund manager to fund manager but at a high level, funds typically take a multi-thematic approach, aligned to the UN’s SDGs to target companies providing solutions to sustainability challenges.
We also believe negative screening is important as this helps to screen out the worst of the investable universe, and many funds held within portfolios have a variety of exclusions.
PortfolioMetrix also believe Sustainable Investing is a truly active investment process as to fully understand and engage on the diverse range of ESG risks and opportunities posed by a company’s products / services and business operations requires a careful and qualitative case by case consideration.
However, we also acknowledge investing Sustainably comes with additional costs and for clients who are sensitive to costs this may make the approach less desirable, despite a desire for Sustainability considerations in their investments. For these clients there is the option to “tilt” the portfolio towards increasing allocations of passive ESG funds in place of active funds to reduce the overall portfolio cost. While PortfolioMetrix would consider this approach to sustainable investing “less green” than the active option we feel cost should not inhibit clients who wish to invest with additional focus on sustainability from doing so.
Process:
The first step of the investment process is to define the asset allocation for the portfolios. Asset allocation is the key risk control within portfolios and is defined across all portfolios offered by PortfolioMetrix.
Funds are then selected to implement the asset allocation, and it is at this step where the sustainability considerations are applicable. Funds selected for Sustainable World must put sustainability at the heart of the investment process and be looking to invest in companies whose products, services and business operations are positively impacting society and the environment – often in the form of solutions based investing.
The sustainability assessment of funds is primarily driven by internal qualitative research through detailed engagement with the underlying fund management team to gain an understanding of their processes around positive screens, negative screens, engagement and also financial considerations.
Positive screens are reviewed to understand the themes that guide identification of companies positively impacting people and the planet and also how these themes are contributing to a more sustainable future. Often the investment themes are linked to the UN’s Sustainable Development Goals. Stock specific examples and challenge to underlying positions form an important part of this step which includes a full review of all underlying holdings to verify the process truly leads to sustainable outcomes.
Negative screens are also reviewed to understand which companies are excluded completely from the investable universe. As a minimum this typically refers to sin stocks (tobacco, alcohol, gambling, controversial weapons and adult entertainment), but often goes further to exclude fossil fuels and violations of the UN’s Global Compact.
How the fund engages with underlying companies is reviewed including recent engagement case studies. Sustainable World portfolios expect funds to drive positive change within companies by identifying areas for improvement within products, services and business operations, and working with the company to implement improvements.
External data sources provide an additional sense check. Worthstone’s Impact Portal, and Style Analytic’s ESG scores are reviewed to ensure all Sustainability consideration have been factored into the analysis.
At PortfolioMetrix, the IA’s Responsible Investment components have been adopted as a method of classification for all funds used within all portfolios. The process detailed above is key to identifying where funds sit on Responsible Investing spectrum, with Sustainable World portfolios focusing on funds classified as either “Susainability Focused” or “Impact Investing”
Finally, Sustainable World funds must also pass PortfolioMetrix’s financial criteria of coherent philosophy and process, experienced people and track record of strong performance for inclusion.
Resources, Affiliations & Corporate Strategies:
PortfolioMetrix has been managing investments for UK clients since January 2013 and in January 2017, launched the Sustainable World portfolios with the aim of offering a customisable model portfolio solution to clients who wish to achieve positive social and environmental impact alongside financial returns.
The Global Investment team consists of 11 members based in South Africa, the UK and the USA. The team are responsible for asset allocation and fund selection research across all approaches managed by PortfolioMetrix. Sustainable World portfolios are available to UK and Irish clients, and as a result, it is the UK team members who focus on fund research for this approach. Additionally, 3 members of the UK team have passed the CFA’s ESG in Investing examination.
The team has access to a range of data providers including Bloomberg, Financial Express, Style Analytics and Worthstone’s Impact Portal (powered by 3D Investing) to provide quantitative and qualitative data for research, as well as excellent access to fund managers, investment specialists and other resources to complete qualitative analysis.
PortfolioMetrix is a signatory of the UN’s PRI and a member of UKSIF
SDR Labelling: Not eligible to use label
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
|
|---|---|---|---|---|---|---|---|---|
PortfolioMetrix Sustainable World |
Sustainable Style | Not eligible to use label | DFM/Portfolio | Global | Mixed Asset | 23/01/2017 | May 2023 | |
ObjectivesPotfolioMetrix Sustainable World portfolios are designed with a dual mandate:
|
Fund Size: £139.80m (as at: 31/03/2023) Total Screened Themed SRI Assets: £164.80m (as at: 31/03/2023) Total Responsible Ownership Assets: £1320.00m (as at: 31/03/2023) Total Assets Under Management: £1320.00m (as at: 31/03/2023) Contact Us: Info@portfoliometrix.co.uk |
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Sustainable, Responsible &/or ESG OverviewAwaiting update from DFM (June 2024)
The PortfolioMetrix Sustainable World portfolios have been developed to achieve positive social and environmental impact without sacrificing clients’ financial objectives.
To achieve this goal, the approach invests in funds that embrace Sustainability. In the context of Sustainable World portfolios, Sustainability means those funds who select companies that deliver a clear positive net benefit to society and the environment through the product / service provided and through their operations. Underlying funds often adopt a multi-thematic approach aligned to the UN’s Sustainable Development Goals as a framework to identify those companies. This approach typically leads to investments in companies providing solutions to sustainability challenges.
Further, underlying funds should exclude industries and specific companies with negative social or environmental impacts as well as seek to improve the corporate behaviour of investee companies via engagement. |
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Primary fund last amended: May 2023 |
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Information received directly from Fund Manager |
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Please select what you would like to read:
Fund FiltersSustainability - General
Sustainability policy
Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information.
Sustainability focus
Find funds which substantially focus on sustainability issues
Sustainability theme or focus
Find funds where there is a significant emphasis on (environmental and social) sustainability. Funds with a 'sustainability theme' typically place more emphasis on the area than funds with a 'sustainability policy' - meaning that it is more likely to drive investment selection. Strategies vary. See fund information for further detail.
Encourage more sustainable practices through stewardship
A core element of these funds aim to encourage higher sustainability standards across business practices through responsible ownership / stewardship / engagement / voting activity Environmental - General
Environmental policy
Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.
Limits exposure to carbon intensive industries
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.
Favours cleaner, greener companies
Funds that aim to invest in companies with strong or market leading environmental policies and practices. Strategies vary - in particular the balance between 'financial' aspects and environmental benefits. Some may invest substantially in solutions or 'positive impact' companies - others may invest in more conventional companies providing certain environmental criteria are met. See fund information for further detail. Climate Change & Energy
Encourage transition to low carbon through stewardship activity
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity
Invests in clean energy / renewables
Funds that hold companies in the clean energy and renewable energy sectors (at the time research was supplied). Fund strategies vary, in particular the proportion of investment in these areas may vary significantly. Check fund literature for details. Social / Employment
Social policy
Find funds that have policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). Funds with social policies typically avoid companies with low standards or work to encourage higher standards. See fund information for detail. Ethical Values Led Exclusions
Tobacco and related product manufacturers excluded
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Armaments manufacturers avoided
Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details. Meeting Peoples' Basic Needs
Invests > 50% in social housing
Find funds that invest more than 50% in social housing or similar assets.
Invests > 5% in social bonds
Find funds that invest in ‘social bonds’ which raise funds for the purpose of financing projects with positive social (people related) outcomes.
Invests > 50% in social bonds
Find funds that invests more than 50% in social bonds which raise funds for the purpose of financing projects with positive social (people related) outcomes. Governance & Management
Governance policy
Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary. See fund literature for further information.
Encourage higher ESG standards through stewardship activity
A core element of these funds will aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity Fund Governance
ESG integration strategy
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature. Asset Size
Invests in small, mid and large cap companies / assets
Find a fund that invests in a combination of small, medium and larger (potentially multinational)companies.
Invest in supranationals
International entities or bodies with agreed remits that are broadly similar to those that may otherwise be undertaken by individual governments eg the UN Targeted Positive Investments
Invests > 5% in sustainable bonds
Invests in loan stock that is exclusively used to finance environmental and social projects. See ICMA Sustainable Bond Guidelines.
Invest > 5% in transition bonds
Invests in loan stock that is supporting or enabling the shift towards a cleaner, more sustainable future. Strategies vary significantly and may or may not be linked to specific outcomes.
Invests > 5% in the blue economy
Invests in assets that focus on improving the marine environment – for both wildlife and the people whose livelihoods directly depend on it.
Invests > 5% in green bonds
Find funds that invest in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area.
Invests > 50% in green bonds
Find funds that invest more than 50% in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area. Impact Methodologies
Aims to generate positive impacts (or 'outcomes')
Funds that aim to help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information.
Positive environmental impact theme
Find funds that specifically set out to help deliver positive environmental impacts, benefits or 'real world' outcomes.
Positive social impact theme
Find funds that specifically state that they aim to deliver positive social (i.e. people related) impacts and/or outcomes.
Invests in environmental solutions companies
Find funds that direct investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Invests in social solutions companies
Find funds that invest in companies where a major part of their business is specifically aimed at helping to address social challenges. e.g. companies helping to address poverty.
Invests in sustainability / ESG disruptors
Find funds that specifically set out to invest in companies that are regarded as 'disrupting' existing business practices - typically through the development of innovative (sustainability aware) products and/or practices.
Aim to deliver positive impacts through engagement
Fund aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
Over 50% in assets providing environmental or social ‘solutions’
50% of fund assets are regarded by the fund manager as being significantly focused on providing solutions to environmental or social challenges. Strategies vary. How The Fund Works
Significant harm exclusion
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
Different risk options of this strategy are available
See fund information for different risk options of this fund strategy Unscreened Assets & Cash
All assets (except cash) meet published sustainability criteria
All assets held in the fund - except cash - meet the sustainability criteria published in fund documentation. Intended Clients & Product Options
Intended for investors interested in sustainability
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.
Intended for clients who want to have a positive impact
Finds funds designed to meet the needs of individual investors with an interest in ‘Impact investment funds’ which help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information.
Available via an ISA (OEIC only)
Find funds that are available via a tax efficient ISA product wrapper.
Portfolio SRI / ESG options available (DFMs)
Only applicable for DFM’s & portfolio providers. Finds those that offer an SRI / ESG portfolio option
Multiple SRI / ESG portfolio options available (DFMs)
Only applicable for DFM’s & portfolio providers. Find service providers who offer multiple SRI / ESG portfolio options
Bespoke SRI / ESG portfolios available (DFMs)
Only applicable for DFM’s & portfolio providers. Find service providers who offer bespoke ('personalised') SRI / ESG portfolio options Fund Management Company InformationAbout The Business
Responsible ownership / stewardship policy or strategy (AFM company wide)
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Responsible ownership policy for non SRI funds (AFM company wide)
Find funds run by fund managers that apply Responsible ownership or 'Stewardship' policies to all or most of their investment assets. This means active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
Integrates ESG factors into all / most (AFM) fund research
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management. Collaborations & Affiliations
PRI signatory
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
UKSIF member
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association Transparency
Full SRI / responsible ownership policy information available on request
Find fund management companies that will supply information about their sustainable and responsible investment activity on request. Sustainable, Responsible &/or ESG Policy:Responsible investing is at the centre of all portfolios constructed by PortfolioMetrix, as we firmly believe environmental, social and governance considerations are a crucial part of maximising long-term risk adjusted returns. Sustainable World portfolios are constructed in the same risk controlled manner as all PortfolioMetrix portfolios: starting from asset allocation and building up to fund selection, adhering to the same Stewardship and ESG Integration applicable to all PortfolioMetrix portfolios, but take sustainability a step further, by only investing in funds that put sustainability at the heart of the investment process.
Sustainable World portfolios focus on funds that embrace positive screening, as we believe that by focusing on companies that are contributing positively to society and the environment, not only to do you avoid those having a negative impact, but you are also actively supporting those making a positive contribution - which in the long-run, is more beneficial to society. As a result, the majority of holdings in Sustainable World portfolios are either:
The exact specifics of the positive screens vary from fund manager to fund manager but at a high level, funds typically take a multi-thematic approach, aligned to the UN’s SDGs to target companies providing solutions to sustainability challenges.
We also believe negative screening is important as this helps to screen out the worst of the investable universe, and many funds held within portfolios have a variety of exclusions.
PortfolioMetrix also believe Sustainable Investing is a truly active investment process as to fully understand and engage on the diverse range of ESG risks and opportunities posed by a company’s products / services and business operations requires a careful and qualitative case by case consideration.
However, we also acknowledge investing Sustainably comes with additional costs and for clients who are sensitive to costs this may make the approach less desirable, despite a desire for Sustainability considerations in their investments. For these clients there is the option to “tilt” the portfolio towards increasing allocations of passive ESG funds in place of active funds to reduce the overall portfolio cost. While PortfolioMetrix would consider this approach to sustainable investing “less green” than the active option we feel cost should not inhibit clients who wish to invest with additional focus on sustainability from doing so. Process:The first step of the investment process is to define the asset allocation for the portfolios. Asset allocation is the key risk control within portfolios and is defined across all portfolios offered by PortfolioMetrix.
Funds are then selected to implement the asset allocation, and it is at this step where the sustainability considerations are applicable. Funds selected for Sustainable World must put sustainability at the heart of the investment process and be looking to invest in companies whose products, services and business operations are positively impacting society and the environment – often in the form of solutions based investing.
The sustainability assessment of funds is primarily driven by internal qualitative research through detailed engagement with the underlying fund management team to gain an understanding of their processes around positive screens, negative screens, engagement and also financial considerations.
Positive screens are reviewed to understand the themes that guide identification of companies positively impacting people and the planet and also how these themes are contributing to a more sustainable future. Often the investment themes are linked to the UN’s Sustainable Development Goals. Stock specific examples and challenge to underlying positions form an important part of this step which includes a full review of all underlying holdings to verify the process truly leads to sustainable outcomes.
Negative screens are also reviewed to understand which companies are excluded completely from the investable universe. As a minimum this typically refers to sin stocks (tobacco, alcohol, gambling, controversial weapons and adult entertainment), but often goes further to exclude fossil fuels and violations of the UN’s Global Compact.
How the fund engages with underlying companies is reviewed including recent engagement case studies. Sustainable World portfolios expect funds to drive positive change within companies by identifying areas for improvement within products, services and business operations, and working with the company to implement improvements.
External data sources provide an additional sense check. Worthstone’s Impact Portal, and Style Analytic’s ESG scores are reviewed to ensure all Sustainability consideration have been factored into the analysis.
At PortfolioMetrix, the IA’s Responsible Investment components have been adopted as a method of classification for all funds used within all portfolios. The process detailed above is key to identifying where funds sit on Responsible Investing spectrum, with Sustainable World portfolios focusing on funds classified as either “Susainability Focused” or “Impact Investing”
Finally, Sustainable World funds must also pass PortfolioMetrix’s financial criteria of coherent philosophy and process, experienced people and track record of strong performance for inclusion.
Resources, Affiliations & Corporate Strategies:PortfolioMetrix has been managing investments for UK clients since January 2013 and in January 2017, launched the Sustainable World portfolios with the aim of offering a customisable model portfolio solution to clients who wish to achieve positive social and environmental impact alongside financial returns.
The Global Investment team consists of 11 members based in South Africa, the UK and the USA. The team are responsible for asset allocation and fund selection research across all approaches managed by PortfolioMetrix. Sustainable World portfolios are available to UK and Irish clients, and as a result, it is the UK team members who focus on fund research for this approach. Additionally, 3 members of the UK team have passed the CFA’s ESG in Investing examination.
The team has access to a range of data providers including Bloomberg, Financial Express, Style Analytics and Worthstone’s Impact Portal (powered by 3D Investing) to provide quantitative and qualitative data for research, as well as excellent access to fund managers, investment specialists and other resources to complete qualitative analysis.
PortfolioMetrix is a signatory of the UN’s PRI and a member of UKSIF SDR Labelling: Not eligible to use label |
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