“The world is reaching the tipping point beyond which climate change may become irreversible. If this happens, we risk denying present and future generations the right to a healthy and sustainable planet – the whole of humanity stands to lose.”Kofi Annan, Former Secretary-General of UN
This Portfolio was originally called the Ethical Portfolio and launched in 2014; we renamed it the Balanced Positive Impact Portfolio in 2020. At the heart of the portfolio is the desire to find investments that protect the world’s resources for future generations and support a sustainable economy. If investors can use their money for good, without compromising their goals and returns we believe this is a compelling story.
Expanding the range
The Balanced Positive Impact Portfolio is the flagship offering.
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 approach to investing that includes the consideration of ESG factors supported by stewardship activities such as voting and engaging.
About the Portfolio
The name, Positive Impact Portfolio, reflects the positive nature of what the portfolio is aiming to achieve, without sacrificing returns, and encompasses the different approaches to investing.
To achieve this, the portfolio looks to Ethical, Impact, ESG (Environmental, Social and Corporate Governance) and Sustainable investments. This includes investment trusts as well as funds.
Ethical tends to be negative screening i.e. you can’t invest in certain things, whereas sustainable is positive. Within sustainable, ESG and Impact assets some managers will include investments which are transitioning from old world models to new.
The portfolio will behave differently from the others due to the mix of holdings which includes renewable energy, social housing etc, which don’t tend to respond in the same way as equity markets.
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.
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. 34.3% of the portfolio has exposure to ESG Leaders. This is an evolving market and not all investments are currently rated.
Where do we invest?
There are some great stories within the portfolio, including:
Civitas Social Housing, which is the first real estate investment trust dedicated to investing into social housing and healthcare facilities.
The Renewables Infrastructure Trust invests in energy sources (wind, solar) that contribute towards a zero-carbon world.
Impax Environmental Markets, which invests in companies which have at least 50% of underlying revenue generated by sales of environmental products or services in energy efficiency, renewable energy, waste and sustainable food and agriculture markets.
The fund also holds bonds, including the Rathbone Ethical Bond Fund. Some examples of its holdings include Chelmer Housing Partnership, Charities Aid Foundation, Places for People and Dolphin for Living. Even in a world of squeezing incomes this fund is generating a yield of 3.5% p.a.
The portfolio also invests across Europe, UK, US, Emerging Markets and Asia as we seek fund managers who actively engage globally with companies to make positive change.
Click here for a short summary of each of the holdings under the Positive Impact Portfolio Range.
Risk and benchmark performance of Portfolio
The Portfolio holds a higher content of equities compared to the Cautious Portfolios, but less than the Adventurous Portfolios (we currently do not offer ethical versions of these portfolios). Currently the Portfolio holds approximately 20% 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. This is an evolving area and we believe this to be the closest match; we have used this since the launch of the portfolio.
The Portfolio was launched on the 31 July 2014 and the total return up to 31 March 2021 is 98.85% against a benchmark return of 29.22%. A detailed breakdown of the performance is shown below.
|1 Yr to 31/03/17||1 Yr to 31/03/18||1 Yr to 31/03/19||1 Yr to 31/03/20||1 Yr to 31/03/21|
|Balanced Positive Impact Portfolio||21.03%||5.99%||5.65%||-2.54%||32.51%|
12 Months Total Return (bid to bid) Source: Morningstar, net income reinvested.
|Balanced Positive Impact Portfolio||15.44%||15.73%||-5.30%||22.35%||12.92%||0.46%|
Performance from 31 July 2014 – 31 March 2021. Performance for 2014 is from 31 July 2014. 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.
Split by funds within the Portfolio
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.
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.