Photo by Zbynek Burival on Unsplash
“Real success can only come if there is a change in our societies and in our economics and in our politics.”
Sir David Attenborough
Aim of Portfolio
| Aim | Benchmark | Time frame | Risk/Volatility | Exclusions | Capital at risk | |
| Cautious Positive Impact Portfolio | To deliver a return of between 6% and 8% gross over the long term. In a normalised environment, this should be above the higher rate of cash or inflation. | Royal London UK FTSE4 Good Index Fund. | 10-years plus | This is our lowest-risk exclusionary strategy. This is best suited to more risk-averse investors. It has a higher weighting to defensive assets such as fixed income (bonds) and tangible assets (infrastructure and property) and a lower exposure to traditional UK and international growth assets. | Yes | Yes |
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About the Portfolio
The name, Positive Impact Portfolio, reflects a desire to achieve positive outcomes for the environment and society without sacrificing returns.
To this end, we build the investments first; whether they fall into the ethical, sustainable or impact bucket is almost irrelevant. We take a blended approach to deliver the best outcomes and the chart below shows the current split between buckets in our Cautious Positive Impact Portfolio.
More details on our approach can be found here
Making a difference
We use analysis from BlackRock for the portfolio. The latest data is shown below based on the holdings as at 1 July 2023.
Split by funds within the Portfolio (as at 1 July 2023)
Portfolio Review
Performance:
The Portfolio was launched on 1 July 2020. The chart shows the total return up to 30 September 2023.
| Total Return Since Launch | Annualised Return Since Launch | |
| Cautious Positive Impact Portfolio | -1.96% | -0.61% p.a. |
| LWM Benchmark | 35.68% | 9.85% p.a. |
| 2021 | 2022 | 2023 | Since Launch | |
| Cautious Positive Impact Portfolio | 9.06% | -17.17 | -4.14% | -0.61% p.a. |
| LWM Benchmark | 16.24% | 1.15% | 5.50% | 9.85% p.a. |
| 1 Year to 30/09/21 | 1 Year to 30/09/22 | 1 Year to 30/09/23 | |
| Cautious Positive Impact Portfolio | 12.22% | -13.32% | -4.22% |
| LWM Benchmark | 23.84% | -2.26% | 14.97% |
Volatility
You should note that past performance is not a reliable indicator of future returns and the value of your investments can fall as well as rise. The total return reflects performance without sales charges or the effects of taxation, but is adjusted to reflect all on-going fund expenses and assumes reinvestment of dividends and capital gains. If adjusted for sales charges and the effects of taxation, the performance quoted would be reduced.
Important notes
What is the difference between the aim of the strategies and benchmark?
The target or aim is to deliver returns of 6% to 8% p.a. over ten years. This includes the fund charges but not our fees and platform charges.
How do we test these figures?
We follow the BlackRock Capital Market Assumptions https://www.blackrock.com/institutions/en-zz/insights/charts/capital-market-assumptions
These outline the long-term asset return expectations. The current return expectations for the portfolios are:
| Return | |
| Cautious Positive Impact Portfolio | 7.01% p.a. |
| Balanced Positive Impact Portfolio | 7.05% p.a. |
| Adventurous Positive Impact Portfolio | 7.39% p.a. |
Would we review the expectations?
If the market expectations for returns are reduced, we will reduce our long-term return profile. We review this quarterly, and although the long-term market expectations have come down, they are still within the 6% to 8% target.
Do we guarantee a return of 6% to 8% p.a. over a ten-year period?
This is our stated aim. We do not guarantee this.
Why do we have a benchmark?
The benchmark is a measure of performance.
We use the Royal London UK FTSE4 Good Index Fund as the benchmark across all the portfolios. We aim to deliver a return of between 6% and 8% p.a. over ten years.
The FTSE4 Good Index can include some fossil fuels, but it is the closest match we can use. Below is the methodology they use.
It does have exclusions:
We don’t have a ten-year track record on the Balanced Positive Impact Portfolio, and the Cautious and Adventurous Portfolios were only launched in 2020. The table shows performance over three years, five years, and since launch (for the Balanced version, this was 1st August 2014).
| 3-years (p.a.) | 5-years (p.a.) | Since Launch (p.a.) | |
| Cautious Positive Impact Portfolio | -2.54% | – | -0.61% |
| Benchmark | 11.13% | – | 9.85% |
| Balanced Positive Impact Portfolio | -1.86% | 1.95% | 6.16% |
| Benchmark | 11.13% | 3.76% | 4.86% |
| Adventurous Positive Impact Portfolio | -0.72% | – | 1.51% |
| Benchmark | 11.13% | – | 9.85% |
How do we measure performance?
Portfolio Level
We have several touchpoints when monitoring performance:
- We monitor performance monthly.
- We have an internal monthly investment risk matrix. Within this, we monitor the target return and compare the performance to a range of discretionary managed portfolios.
- We update the website quarterly with performance data and provide updates.
- From September to February, we conduct a comprehensive review of the portfolios and rebalance on 1 July each year (subject to your approval).
The primary focus of this work is to understand periods of underperformance and adjust where we see appropriate.
For example, we increased exposure to fixed income (debt) in 2023 to reflect higher interest rates and a more conducive environment for these investments.
Fund Level
At a minimum, we review all the funds within the portfolios once a year. We write up the notes from these reviews which are available on the website.
Although we consider more extended-term performance, we also look at short-term performance to understand the reasons for any underperformance or sudden spike. We may change the strategy where we feel that there is a long-term shift in the environment, where we think the investment will no longer be appropriate, if there are better opportunities, or where there has been a significant change to the operation of the strategy.
For example, with higher interest rates, the availability of cash will naturally be limited, meaning companies needing money to develop will find it harder. Therefore, we have increased our exposure to “quality” and reduced our exposure to strategies that carry higher risk with more innovative and cash-poor companies.
Charges
The performance data includes the fund charges but not the platform and LWM fees. Fees are fully disclosed. Below are the fund fees as of 30 September 2023 provided by Trustnet.
| Fund fees | |
| Cautious Portfolio | 0.74% |
| Balanced Portfolio | 0.80% |
| Moderately Adventurous Portfolio | 0.89% |
| Adventurous Portfolio | 0.90% |
| Cautious Positive Impact Portfolio | 0.94% |
| Balanced Positive Impact Portfolio | 0.91% |
| Adventurous Positive Impact Portfolio | 0.91% |
| Income Portfolio | 0.99% |
| Positive Impact Income Portfolio | 1.06% |
We review our charges within the Consumer Duty Fair Value Assessment. We also disclose under transparency on the website.
Performance
You should note that past performance is not a reliable indicator of future returns and the value of your investments can fall as well as rise. LWM only invests in UK based investments although some funds / assets may have overseas holdings, the performance of funds / assets where some holdings are denominated in foreign currencies will also be subject to variations in currency rates.
Factsheets
These factsheets are provided by third parties for information. LWM is not responsible for these factsheets, has not reviewed them, and accepts no liability in connection with your use of them or any of their content. These factsheets display the fund manager’s standard retail charges and please note that product charges and fees may replace the charges displayed.