The new IMX range of model portfolios launched by the Nucleus platform have ESG considerations at their core, according to the range's manager Johnny Letham.
The IMX fund range consists of 12 risk weighted growth portfolios and eleven income focused mandates, but none is specifically designated as having an environmental, social or governance (ESG) mandate.
Letham said all of the funds had ESG consideration, saying “if we had a range of portfolios with ESG in the name, that would imply there are some of the mandates which are not ESG, and that’s not the case."
He added: "The funds we choose for IMX have managers that have ESG capabilities, and we only want managers that have those.”
Nucleus works with consultancy firm Hyman Robertson to manage the ESG aspect of the portfolios.
But Minesh Patel, an adviser at EA Financial Solutions, said Nucleus's approach was "confusing for clients".
He added: “And if I put these portfolios through the ESG screens that I use, would they show up well on it? I have no idea.”
The portfolios are managed by Jonathan Letham, who previously worked as senior vice president of investment strategy at consultancy Redington.
The portfolios will use a mixture of active and passive instruments, according to Mr Letham.
He said in the current economic climate achieving an income in retirement will increasingly mean investing on a total return basis, rather than just for income, in order to tackle the twin dilemmas of low bond yields, and the fact that many of the best performing equities of the past decade have been those which pay no income.
The firm's chief customer officer Barry Neilson acknowledged that many firms have launched model portfolios in recent years, but he believes Nucleus offering is differentiated by the number of portfolios on offer.
He said model portfolio service providers typically offered a range of about “six portfolios, but clients have different time horizons so we think that is very limiting.”
But Patel commented: “I think we may now be at the point where there are too many multi-asset type products out there, and the first question I would always ask is how any new provider is doing something that is different to what is already available?
"And I don’t think the problem with the products that are out there is that they need more risk categories, I think that would just confuse the client.”
david.thorpe@ft.com
