Foster Denovo  

Foster Denovo launches passive ESG portfolios

Foster Denovo launches passive ESG portfolios

Foster Denovo has launched a sustainable portfolio range for clients who want to do more with their investments than "purely generate a competitive financial return".

The national adviser has added five passive portfolios to its existing actively managed counterpart, which will invest in physically backed ETFs, excluding companies without clear environmental, social and governance practices.

Foster Denovo said the range was aimed at clients wanting to do more with their money than "purely generate a competitive financial return".

Roger Brosch, chief executive at Foster Denovo, said the portfolios would provide a "low-cost choice for investors seeking asset growth, whilst managing the risks from environmental, social and governance factors". 

ESG investing has boomed in popularity in recent years as fears over climate change have led investors to consider the impact of their money and as a growing number of millennials have begun investing.

2020 was a record year for ESG inflows, and fund houses have been quick to capitalise on the growing interest with numerous portfolio launches.

Declan McAndrew, head of investment research at Foster Denovo, said: "Our sustainable dynamic portfolios have been carefully designed to balance investment risk with returns to help achieve clients’ financial goals, taking into account different attitudes to risk, time frame, capacity for loss and crucially environmental, social and governance criteria.

"Within this new range, as within our Active SDPs, we have focused on combining internal and external expertise to build portfolios that will proactively adapt to this rapidly changing and exciting field. 

"This new launch will allow us to cater to an even broader range of investors who are looking for investment portfolios that can manage risk, while also delivering aspirational outcomes that reflect their financial objectives." 

Recent data from Morningstar showed global assets in sustainable funds hit £1.21trn by the end of 2020, a record high, after investors pumped £111bn into such funds in the final quarter of the year alone.

Amendments to Mifid II – requiring advisers to incorporate clients’ sustainability preferences as part of the suitability process –have not be onshored from the EU, despite originally being expected to come into force in the first quarter of 2021.

However it is likely the Treasury will follow the EU’s direction of travel on these matters, with changes to suitability rules to include sustainability issues still expected in the next few years.

rachel.mortimer@ft.com