Parmenion Investment Management has launched a range of ESG-focused passive investment portfolios.
The new range, announced today (September 14) will have 10 risk grades, which will invest in funds and ETFs across global bonds and equities.
The ESG aspect of the portfolios include a negative screen which will exclude companies with lower ESG ratings, and ‘positive ESG tilts’, which means a higher allocation to companies with higher ESG ratings.
The portfolios will also look to invest with fund managers who focus on engagement and voting on ESG matters.
Examples used by Parmenion of companies that will not be invested in, or to which the funds will have minimal exposure, include weapons, fossil fuel reserves and tobacco production.
This will mean the underlying funds and ETFs in the portfolios will exclude between 50 per cent and 75 per cent of the broader market.
PIM Strategic Passive ESG will be available to new and existing clients from today.
Parmenion said it has not used ETFs in its passive offerings before now, as there has previously been no cost benefit to using them, and they are not all compatible with all tax wrappers.
However, many products in passive ESG investing are now being launched as ETFs, so it has decided to start investing in the products to make sure the portfolios are diversified and achieve their targets.
The combined investment charge of the portfolios, including underlying fund ongoing charges figure and discretionary fund management fees, ranges from 0.21 per cent to 0.34 per cent.
Managing director at Parmenion Investment Management, Peter Dalgliesh said: “Many investors want access to passive investment solutions which can bring significant diversification benefits at a lower cost and at the same time express their support for environmental, social and governance factors.
“We have combined these two needs in our newest offering, PIM Strategic Passive ESG, an innovative investment solution which captures a rapidly developing part of the market.”
ETFs are becoming increasingly popular among retail investors.
Fund flows into European ETFs rose 25 per cent in the first quarter of the year, though assets under management stalled amid a dip in stock and bond market valuations triggered by the war in Ukraine and rising inflation.
The European ETF market gathered €42.7bn (£36bn) of new funds in Q1 2022, according to Morningstar’s latest European ETF Asset Flows update published this month.
But total assets remained unchanged at €1.4tn (£1.2tn).
In May this year, Hargreaves Lansdown created an ETF research team in response to client feedback.
The company expanded its research to cover ETFs as well as trackers and actively managed funds and trusts.