Morgan Stanley unveils risk-controlled funds with ethical slant

Morgan Stanley Investment Management has launched a duo of Luxembourg domiciled multi-asset funds with a slant to environmental, social and governance (ESG) considerations.

The Global Balanced Fund targets a volatility range of 4 per cent to 10 per cent, while the Global Balanced Defensive Fund has a lower target of 2 per cent to 6 per cent.

The underlying investment process for the two funds mirrors that of the existing Global Balanced Risk Control (GBaR) strategy, which, according to the fund house, is designed to maintain a stable risk profile.

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This strategy has returned just over 36 per cent over a five-year period to 30 August 2016 according to FE Analytics data.

The funds are the first in the GBaR suite to incorporate ESG factors into the process.

Both funds will be managed by Andrew Harmstone and Manfred Hui in London.

Mr Harmstone said: “The new funds will be based on our established GBaR process, which in our view is the most effective way for investors to participate in rising markets while providing strong downside protection.

“We expect the integration of ESG considerations into the process to further improve potential returns and enhance risk management.”

The funds are not yet widely available for sale and are awaiting registration in various markets.

Provider view

Paul Price, (pictured), global head of client coverage at Morgan Stanley Investment Management, said: “Morgan Stanley Investment Management’s extensive multi-asset capabilities are reinforced by the addition of these two new funds. Clients now have greater choice in the implementation of GBaR’s risk-controlled approach and their preferred level of volatility.”

Adviser view

Steven Rowe, director of West Midlands-based Lucent Financial Planning, said: “If you ask a client if they would be interested in investing in a fund which has ethical holdings, more often than not, he or she would show an interest. However, there are not a great deal of ethical funds circling around the marketplace. Only clients with strong convictions in their ethical beliefs would demand to be invested in an ESG fund. Others are simply interested in funds that are likely to generate the most returns – regardless of whether or not it invests ethically.”

He added: “I think clients are aware that investment risk is more apparent post-Brexit, but that has not stopped them from investing. Some people have been bullish in their approach, but I suppose investors who voted ‘In’ and those who voted ‘Out’ would have a different outlook.”


Ongoing charge figure (OCF) of 0.59 per cent for the Global Balanced Defensive fund and 0.99 per cent for the Global Balanced fund.


A school of thought claims that there is a greater appetite for investments that do not conflict with ethical standpoints. The launch of the two funds with a slant to such investments suggests that the fund house agrees with this viewpoint.

The fact that the funds mirror the investment process of one of the firm’s pre-existing funds with years of past performance statistics is a boon, as intermediaries seldom invest their clients’ money in entirely new propositions. However, the returns generated by the firm’s pre-existing strategy over a five year period is somewhat modest.