“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

The portfolio looks to deliver above inflation returns (capital growth) through a combination of fixed interest, equity, and alternative investments with a responsible investment mandate.

Responsible investing is an umbrella term covering different routes to investing; we see it as doing good and believe there are three main ways to achieving this – ethical, sustainable / responsible and impact. More details can be found here

About the Portfolio

The name, Positive Impact Portfolio, reflects a desire to achieve positive outcomes for the environment and society without sacrificing returns.

This means that we build the investments first; whether they fall into the ethical, sustainable or impact bucket is almost irrelevant. This is because we take a blended approach to deliver the best outcomes. The chart below shows the current split between buckets in our Cautious Positive Impact Portfolio.

More details on our approach can be found here

Carbon Footprint

Using data from yourSRI.com and MSCI, the chart below demonstrates how the portfolio stands against the MSCI ACWI Low Carbon Leaders, MSCI Carbon Target and MSCI ACWI Index.

Portfolio Score

Using data from yourSRI.com the Portfolio is compliant with the ten principles of the UN Global Compact.

This means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. More details can be found clicking here

The chart below shows the portfolio ESG Rating Distribution with an overall rating of A. 35.60% of the portfolio has exposure to ESG Leaders. This is an evolving market and not all investments are currently rated.

Transition Monitor

This tests the Portfolio against the Paris Agreement. The key points are:

  1. Circa 25% of the portfolio is aligned to the Paris Agreement
  2. Of this 25%, around 45% of equities is in power. This equates to 27 tonnes of CO2 emissions which is equivalent to 4.9 homes’ electricity for one year
  3. The potential financial risk to the portfolio is around -0.82% on equities based on the current holdings and if nothing changed

We can overlay this information with what we know. So, for example, we know that some of the holdings have exposure to coal which is being transitioned to renewables (NextEra Energy) so we would expect the coal exposure to reduce.

The other side is that 75% of the portfolio covers other areas (for example Civitas which in turn invests in social housing), and therefore the portfolio is more rounded not just covering the carbon environment but also other enviromental and social issues meaning there are different drivers which are good for the planet and society.

Where do we invest?

To bring this to life below are four example holdings.

ASI Europe ex UK Ethical Equity Fund (Ethical)

Aim

The principal outcome for the strategy is deliver investor-led sustainability. The strategy excludes those sectors that investors are concerned about and prioritises those with the right processes and solutions. Investors have a voice in the criterion the managers employ to create the investable universe.

Transitioning

They do invest in companies that are transitioning to positive change, but they must be within the guidelines set by the investors in the Ethical Approach Document. This document lays out the negative exclusions as well as the positive inclusions.

Sample holdings

ASML Holding, Iberdrola SA, Enel SpA, Schneider Electric SE, Partners Group Holding AG

Carmignac Emerging Markets Fund (Sustainable)

Aim

The strategy aims to enable positive change in emerging market countries by contributing directly or indirectly to improve living standards in these countries with their investments. It involves delivering the best returns possible while having a positive impact on society and the environment. The strategy uses a combination of negative screening and exclusion policies as well as ESG integration and positive screening. They also favour companies with a low carbon approach.

Transitioning

Yes, they are looking at trajectory and efforts undertaken by companies rather than having a static approach that consists of looking at a company / its ESG scoring at a given time. Therefore, transitioning companies are key, as by making efforts and changing the way they operate, they have more potential impact in driving positive change.

Sample holdings

JD.com, Samsung Electronics, Itausa Investimentos, TSMC, Hyundai Motor Co

Regnan Global Equity Impact Solutions Fund (Impact)

Aim

The strategy is a solutions-first strategy, focused on investing in mission-driven businesses that address underserved environmental and social challenges and deliver real, systematic change for the better.

Transitioning

Yes, the strategy will invest in transformational companies undergoing a significant shift in their business model or operations towards one that is focused on the delivery of a solution as identified using their proprietary systems.

Sample holdings

Evoqua Water Technologies, Xylem, Befesa SA, Agilent Technologies, Dürr

Civitas Investment Trust (Thematic Impact)

Aim

The strategy is a leading Real Estate Investment Trust (REIT) dedicated to investing in the social housing and healthcare sectors in the UK. They have a dual objective of achieving both positive financial returns and large scale measurable social impact.

Transitioning

No

Sample holdings

High Acuity Facility Wales, Healthcare Facility Wales, St Thomas House Chester, Bedwardine Court Worcester, Lancaster Avenue London

Split by funds within the Portfolio

Below are the holdings as at 1 July 2021. This includes the aim of each strategy, the style, whether they invest in assets which transitioning to deliver positive outcomes and example underlying holdings.

Fund NameAimStyleTransitioningExample HoldingsPercentage Holding
Fixed Interest / Absolute Return20.25%
Rathbone Ethical Bond FundThe aim is to achieve positive outcomes by investing in those companies which are doing things ethically and responsibly.EthicalNoLloyds Banking Group, Aviva PLC, HSBC Capital Funding, Scottish Widows and Legal and General Group.6.75%KIID
Aegon Ethical Corporate Bond FundThe aim is to deliver a combination of income and capital over a 7-year period within the fund’s predefined ethical criteria.EthicalCompanies are issuing ESG labelled bonds, and ring-fencing assets raised to deliver meaningful positive impact. The strategy has invested around 12% into this area and expects this to grow.LCR Finance PLC, Transport for London, ING Group, Skipton Building Society and Coventry Building Society.6.75%KIID
Newton Sustainable Real Return FundThe aim is to deliver a positive return by investing in companies which exhibit the following characteristics: solution providers (those providing solutions to environmental or social challenges), balance stakeholders (those that balance well social and enviromental issues) and transition.SustainableYes, the company will invest in companies that have committed explicitly to improving their environmental and social impacts.US 10 Year Notes Future, iShares Physical Gold, Wisdom Tree Physical Swiss Gold, Invesco Physical Gold and BNP Paribas Issuance.6.75%KIID
UK Equities6.00%
Premier Ethical FundThe aim is to deliver capital growth by excluding the negative (those companies with a negative social and environmental impact) and encouraging the positive (companies whose products and services make a contribution to sustainable development and aid environmental sustainability).EthicalThe ethical policy would exclude most transitioning companies. They may invest in a company where the transition had a material benefit to the key themes of health and education, protecting the planet and enhancing society.TinyBuild Inc, Frontier Developments PLC, Games Workshop Group PLC, Sumo Group PLC and Gym Group (The) PLC.3.00%KIID
Royal London Sustainable Leaders FundThe aim is to invest in companies that support the transition to a cleaner, safer, healthier and more inclusive society.SustainableYes, but only if a transitioning company was already significantly along that transition.Prudential PLC, Unilever PLC, SSE PLC, AstraZeneca PLC and Experian PLC.3.00%KIID
European Equities6.00%
ASI Europe ex UK Ethical Equity FundThe main aim is to deliver investor-led sustainability. The strategy excludes those sectors that investors are most concerned about, and prioritises those with the right processes and solutions. Investors have a voice in the criterion they employ to creat the investable universe.EthicalYes, they do invest in transitioning companies but within the guidelines set by the investors in the Ethical Approach Document. This document lays out the negative exclusions as well as the positives.ASML Holding, Iberdrola SA, Enel SpA, Schneider Electric SE and Partners Group Holding AG.3.00%KIID
Liontrust Sustainable Future European Growth FundThe aim is to invest in the economy of the future, and to do that they have identified 21 sustainable themes that are contributing in different ways to creating a cleaner, healthier and safer planet.SustainableNo.ASML Holding, Avanza Bank Holding, DNB, Svenska Handelsbanken and Roche Holdings.3.00%KIID
US Equities6.00%
Legg Mason ClearBridge US Equity Sustainability Leaders FundThe strategy uses the SDGs to provide a framework to complement and support the ESG considerations. They look to invest only in those companies with outstanding ESG characteristics. Themes or issues are specific to the opportunity set being analysed rather than broad. For example, food safety and wages in the consumer staples and discretionary sectors, and executive compensation and data security in financials.SustainableNo.Microsoft, Apple, Bank of America, TE Connectivity and UnitedHealth Group.6.00%KIID
Global Equities51.75%
BMO Responsible Global Equity FundThe aim is to invest in those companies which encourage a positive contribution to broader social and environmental issues by seeking sustainability leaders or potential leaders. They overlay an ethical screen within the process.EthicalNo.Microsoft, Apples, TSMC, Linde and Thermo Fisher Scientific.3.00%KIID
Sarasin Responsible Global Equity FundThe aim is to invest in those companies whose success is aligned with the long-term interests of society. Taking this a step further they are looking at companies with a social purpose that set out to solve issues of people and planet profitably, and do not profit from causing problems.EthicalYes, but they would not invest in any company where more than 5% of its revenues are derived from the extraction of fossil fuels, from tar sands and oil and gas extraction.Deere & Co, The Middleby Corp, Mastercard, Essilorluxottica and CME Group.3.00%KIID
Royal London Sustainable World TrustThe aim is to invest in companies that support the transition to a cleaner, safer, healthier and more inclusive society.SustainableYes, but only if a transitioning company was already significantly along that transition.Microsoft, Koninklijke Philips, Texas Instruments, AstraZeneca and Experian.3.00%KIID
Baillie Gifford Positive Change FundThe aim is to deliver a positive impact. They look for companies for whom delivering a positive impact is core to their business; whose products and services represent a significant improvement to the status quo; and who conduct business with honesty and integrity. Four key themes are social inclusion and education, environment and resource needs, healthcare and quality of life and base of the pyramid.ImpactYes, they recognise there is no perfect company and when considering investments they look at areas of controversy, the negative consequences of operations and a company’s awareness of those issues.Tesla, Moderna, M3, TSMC and ASML Holding.3.00%KIID
Ninety-One Global Enviroment FundThey aim to invest in companies across the pathways to a low carbon economy (which include renewable energy, electrification and resource efficiency) that they believe have structural growth potential, sustainable returns and strong competitive advantages.ImpactThey look to hold companies that they believe will benefit from the ongoing energy transition, and they would look to exclude companies where revenues would be significantly eroded by the transition.NextEra, Waste Management, Wuxi Lead Intelligent Equipment, Croda International and Aptiv.3.00%KIID
Regnan Global Equity Impact FundThe fund is a solutions-first strategy, focused on investing in mission-driven businesses that address underserved enviromental and social challenges and deliver real systematic change for the better.ImpactYes, the strategy will invest in transformational companies undergoing a significant shift in their business model or operations towards one that is focused on the delivery of a solution as identified using their proprietary systems.Evoqua Water Technologies, Xylem, Befesa SA, Agilent Technologies and Duerr.3.00%KIID
Foresight Sustainable Real Estate Securities FundThe fund will only invest in companies where they deliver a net social or environmental benefit. They believe sustainable real estate has a significant positive impact on society. The four key themes are – good health and wellbeing, industry innovation and infrastructure, sustainable cities and communities and climate action.SustainableNoSupermarket Income, Physicians Realty Trust, Medical Properties Trust, Civitas Social Housing and Arena.6.75%KIID
Foresight Global Real Infrastructure FundThe strategy only invests in companies that the investment team believes deliver a net social or environmental benefit and meets the ten principles of the United Nations Global Compact.SustainableNoEasterly Government Properties, Brookfield Infrastructure, Scatec ASA, Infratil Ltd and 3i Infrastructure.6.75%KIID
The Renewables Infrastructure Group LimitedTRIG is a London-listed investment company whose purpose is to generate sustainable returns from a diversified portfolio of renewable infrastructure that contribute towards a zero-carbon future.ImpactNoOnshire wind (55%), offshore wind (35%), Solar PV (9%) and Battery (1%).6.75%Factsheet
Civitas Social Housing PlcThe strategy is the leading REIT dedicated to investing in the social housing and healthcare sectors in the UK. They have a dual objective of achieving both positive financial returns and large scale measurable social impact.ImpactNoHigh Acuity Facility Wales, Healthcare Facility Wales. St Thomas House Chester, Bedwardine Court Worcester and Lancaster Avenue London.6.75%Factsheet
VT Gravis Clean Energy Income FundThe strategy invests in companies contributing to the transition to a low carbon economy and net zero emission targets, helping to combat climate change.SustainableIn the energy sector there remains a legacy of nuclear and fossil fuel generation – for companies involved in multiple generation methods, natural gas is deemed acceptable whereas any involvement in coal and nuclear activities is deemed unaccepetable.Renewables Infrastructure, Greencoat UK Wind, Atlantica Sustainable Infrastructure, TransAlta Renewables and Foresight Solar Fund.6.75%KIID
Asia and Emerging Markets10.00%
Stewart Investors Asia Pacific Sustainability FundThe strategy aims to achieve absolute returns over the long-term by making investments that contribute to positive social and environmental sustainability outcomes.SustainableYes, the engagement is key to this and if engagement shows no prospect of bring about the required change, they will divest.Mahindra & Mahindra, CSL, Hoya, Tata Consultancy Services and Unicharm.5.00%KIID
Carmignac Emerging Markets FundThe aim is to enable positive change in emerging market countries by contributing directly or indirectly to improve living standards in these countries with their investments. The strategy uses a combination of negative screening and exclusion policies as well as ESG integration and positive screening.SustainableYes, they are looking at trajectory and efforts undertaken by companies rather than having a static apporach that consists of looking at a company / its ESG scoring at a given time.JD.com, Samsung Electronics, Itausa Investimentos, TSMC and Hyundai Motor Co.5.00%KIID

Portfolio Review

Quarterly Portfolio UpdateApril 2021
Quarterly Market UpdateApril 2021
Morningstar Quarter 1 2021 Portfolio OverviewApril 2021
Quarterly Portfolio UpdateJanuary 2021
Quarterly Market UpdateJanuary 2021
Quarterly Portfolio UpdateOctober 2020
Quarterly Market UpdateOctober 2020

Risk and benchmark performance of Portfolio

The Portfolio holds a higher content of fixed income investments compared to the Balanced and Adventurous Portfolios. Currently the Portfolio holds approximately 20.25% in assets such as fixed interest and absolute return funds, with the rest in equity funds which can include property. We believe this is the best way to provide potential upside growth as well as providing equal weight between risk and reward.

For more information click here

What is the benchmark

We use the Royal London UK FTSE4Good Tracker Trust. The FTSE4Good Index is a series of ethical investment stock market indices launched in 2001 by the FTSE Group. The index excludes companies due to their involvement in tobacco production, nuclear weapons, conventional weapon systems, or coal power industry and rates companies for inclusion based environmental sustainability, relationships with stakeholders, attitudes to human rights, supply chain labour standards and the countering of bribery. Example holdings include Unilever, AstraZeneca, HSBC Holdings, Diageo and GlaxoSmithKline. This is an evolving area and we believe this to be the closest match.

Performance

The Portfolio was launched on the 1 July 2020 and the total return up to 31 March 2021 is 13.25% against a benchmark return of 13.72%. A detailed breakdown of the performance is shown below.

Source: Morningstar, on a bid to bid basis with net income reinvested. 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

Performance

The performance for the portfolio is based on the previous holdings for the portfolio. Data for performance is sourced from Morningstar. These figures are provided to give an indication of the performance of the Portfolio. The performance figures take into account all fund / asset charges but do not reflect any additional charges, for example the cost of the investment plan and fees paid to LWM. These expenses may reduce the actual figures shown.

As an example of how this will impact on the performance, assuming the total gross cost of the Portfolio is 0.79% p.a. (this is reflected in the performance figures shown), then after rebates and reflecting any fees payable to LWM Consultants the actual cost of this portfolio could be 2.19% p.a. (on a fund of £100,000 this would be £2,190 p.a.). This means that the drag on performance is around 1.40% p.a. (on £100,000 this is around £1,400 p.a.). The cost of accessing the funds may be higher via other routes and will include additional fees, the estimate is based on the highest charge via a SIPP and for other investments the charge will be lower. Charges may also reduce depending on the size of the assets held.

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.