IFAS SEE AN INCREASE IN DEMAND FOR GLOBALLY DIVERSIFIED ETHICAL INVESTING

• Less than half are satisfied with the range of funds currently on offer
• Heartwood has launched two new ethical multi asset investment strategies to meet changing client preferences

One in four (25%) IFAs have seen an increase in client demand for ethical investing over the last few years but just two in five (43%) are satisfied with the current range of ethical investment options on offer. This is according to new research1 by Heartwood Investment Management, the global multi asset investment specialist.

The research, which canvassed the views of UK based IFAs, revealed that more than four in five (81%) would prefer to invest in a globally-diversified ethical portfolio for their clients. Just one in ten prefer investing in a single-strategy ethical fund.

The reason for their preference is attributed to managing client risk. Nearly a third (31%) of intermediaries have struggled to manage their client’s risk when buying single strategy ethical funds in the last six months.

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The research by Heartwood Investment Management also highlighted the need for an integrated screening process when building ethical portfolios. Indeed more than three in five (62%) intermediaries would prefer to invest in a diversified ethical strategy that applies both positive and negative screening criteria.

Earlier this month Heartwood Investment Management launched two new ethical multi asset investment strategies. The Ethical Balanced and Ethical Growth strategies have risk / return profiles aligned with Heartwood’s long standing total return Balanced and Growth investment strategies, but are implemented using investments that meet appropriate ethical criteria.

Heartwood’s ethical strategies use an integrated approach that combines investments with a positive social or environmental impact with a negative screening process for to exclude socially harmful activities. The portfolios are designed to avoid exposure to tobacco, weapons manufacturing, gambling, alcohol and pornography.

Matt Hollier, Head of Investment Product at Heartwood Investment Management, said: “Our research has clearly identified a growing demand for ethical investing amongst IFAs and their clients. But digging deeper, there is a clear level of concern by advisers about whether single strategy ethical funds can deliver the appropriate risk / return trade off. We are struck that 4 in 5 advisers prefer a globally diversified ethical portfolio for their clients. It is also clear that a significant majority of advisers prefer an investment approach that blends a positive ethical overlay with standard negative screening.”

Noland Carter, Head of Heartwood Investment Management, said: “Clients are increasingly looking to have portfolios managed in a way that is aligned with their values and ethical concerns. Our IFA partners provide critical input to the design of our investment solutions and I am delighted that we have been able to launch new strategies that align strongly with the feedback we have received. More broadly, we believe this also reflects the needs of a wide range of private investors, charities, trusts and institutions.”

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