True to it, not new to it - PortfolioMetrix ESG Investing


SRI Services recently hosted their annual Good Green Money Event where our Investment Analyst Oliver Jones presented on a panel called Meet the DFMs: Building Forward-Looking Portfolios. In the blog below Oli speaks about PortfolioMetrix’s ESG investment track record, sustainable investing policy and investment team. 

In terms of track record, PMX has been running UK portfolios since 2013 and we aren’t new to ESG investing - having launched our Sustainable World Portfolios in January 2017.

Over the near 6 years of running our portfolios, we have seen the ESG investing landscape evolve rapidly, with an array of approaches now available to meet a wide variety of client needs.

PortfolioMetrix's Sustainable World is a ‘dark-green’ type solution, with an investment philosophy focused on positive change. We firmly believe that what the portfolios are investing in, not what they aren’t investing in, is the most powerful way to positively impact society and the environment.

To achieve this, we use mainly article 9 funds (or their UK-domiciled equivalents) focused on positive screening. This involves selecting companies whose products & services positively contribute to one or more sustainability themes, such as clean energy, health & well-being and resource efficiency. We also want the impact to be material and intentional, to ensure portfolio companies are truly supporting positive change.

Engagement is also a crucial part of the process as we fully appreciate that no company is perfect when it comes to Sustainability and our experience has shown engagement and transition can often drive the largest positive impact within portfolios. Take Ørsted for example, a company widely held in Sustainable World that was formerly a fully integrated oil & gas major known as DONG and is now the largest provider of offshore wind globally.

Additionally, we prefer active funds to passive ESG alternatives. This is because we believe dark green sustainable investing is an active management process, as to fully understand the impact of a company’s products and services on society and the environment requires more than just what companies choose to disclose, and instead requires an in-depth understanding of the way a company operates. The passive ESG landscape is also still relatively new and lacks available funds – particularly for asset classes such as bonds and real assets.

The result of this approach to sustainability is a diverse and differentiated portfolio of companies, generating a genuinely positive impact on both society and the environment.

What makes Sustainable World truly unique is the ability to fully customise the portfolio to meet each client’s needs. Many of our peers only have one ESG solution for end-clients to invest in, regardless of their risk appetite. We don’t think this meets suitability requirements and hence we can offer an ESG solution that is tailored to the client’s exact risk score.

While we do believe dark green sustainable investing is an active management process, we also do not believe cost should be a barrier to investing in a greener portfolio. As a result, Sustainable World portfolios can be passively tilted to incorporate varying amounts of passive ESG funds to reduce the overall portfolio cost – although we do believe this leads to a lighter green portfolio.

The team responsible for Sustainable World, are the same 12 people responsible for all portfolios at PortfolioMetrix. The team is diverse in nature & qualifications and consists of investment professionals based here in the UK, South Africa and also the US. 10 of the team have passed the CFA examinations, and a further 5 employees have completed the CFA’s ESG in Investing Certificate. The team also manage a range of ESG & Sustainable portfolios for Irish-based investors and manages a Sustainable World Global Equity Fund of Fund for South African-based investors – the first of its kind.

If you would like more information on our ESG Investing Options or Sustainable World Portfolios, please contact us here.