The strategy, part of Tatton’s Strategic Managed Portfolio Service, was launched in response to client demand for a portfolio which combined socially responsible investing with Tatton’s discretionary management overlay.
The primary objective of the portfolio will be to generate income and growth over the longer term. It will give significant exposure to capital markets through a range of diversified UK and international investments that meet strict ethical and financial criteria.
It follows the Ibbotson strategic asset allocation in its balanced risk profile target, which is currently set to invest approximately 60 per cent in equity and the remainder in lower-risk asset classes.
It will be made up of a combination of cash, corporate bonds, UK equity and global equity, aiming to avoid exposure to temporarily fashionable asset classes which then run the risk of becoming overvalued in the short to medium term.
Holdings in the fund include the Royal London Ethical Bond fund, the Kames Ethical Corporate Bond fund and the Rathbone Ethical Bond fund.
The Managed Ethical Portfolio Strategy will be available initially through the Nucleus platform.
It is best suited to the socially responsible investor with a balanced risk profile. Ideally the investor should have a long-term investment time horizon, being willing to stay invested for a minimum of seven years.
Reactions
Provider view
Lothar Mentel (pictured), chief executive of Tatton Investment Management, said: “There has been growing demand from our adviser community to introduce an ethical strategy, and we believe the portfolio we have put together will prove extremely popular with them and their clients.”
Adviser view
Lisa Hardman, a director of Norwich-based Investing Ethically, said: “We have had a look at the new managed ethical portfolio service, and it looks like a reasonable offering and useful option for IFAs who are not ethical specialists.
“The charges look reasonable but it is important to understand that there is no ‘one size fits all’ within ethical investments, as each investor has a slightly different understanding of what ethical means to them.
“A couple of the investments in the portfolio would not meet the criteria of some ethical investors. For example, a couple of the funds have considerable holdings in Royal Dutch Shell or Rio Tinto. Given the recent focus on disinvestment from fossil fuels and climate change by a number of religious organisations, such inclusions could prove contentious.”
Charges
A cost of investment TER of 0.65 per cent before platform and advice charges.
Verdict
Tatton’s service appears to be meeting demand, but it has been pointed out that some of the investments may not meet the criteria of ethical investors who want to avoid holdings in fossil fuels. With climate change an issue once again, this may make the service less attractive to many ethical investors.
