Our Ethical Managed Account Portfolios

Ethical Advisers Funds Management (which is wholly owned by Ethical Investment Advisers), currently run four SMA (Separately Managed Account) portfolios designed to provide investors with access to well-diversified investments which are actively making a positive contribution to a sustainable future. For more information on the SMAs, please visit our Ethical Advisers Funds Management website.

ethicalSMA

The diversified SMA’s are ‘Growth’ and ‘Fixed Income’ portfolios, which allow us to combine both to cater for a range of different risk profiles. Both portfolios have outperformed their benchmarks since inception (details available on request).

The Australian Share SMA’s are an actively managed ‘Mid Cap’ portfolio, and an optimised passive ‘Large Cap’ portfolio.These portfolios are designed to give investors a low cost solution with robust investment processes. Both portfolios have outperformed their benchmarks since inception (details available on request).

Our process involves negative screens that filter out activities that are undesirable from an Environmental, Social and Governance (ESG) perspective, positive screens that favour sustainable business practices, and a size, sector and valuation overlay. Our Investment Committee includes External Consultants Mark Forstmann (Investment Analyst) and David Bassanese (Economist).

Separately Managed Accounts (SMA’s) are share portfolios which allow you to have the benefit of a portfolio of direct shares, ETF’s and managed funds packaged like a single managed fund, which allows you to have a less active approach than managing individual shares. Instead of buying units in a managed fund, when you purchase a SMA you are actually purchasing each individual investment. This gives you more transparency over the assets you own, as well as more control over capital gains tax and switching investments. You are the beneficial owner of the underlying securities and that means you receive the dividends and franking credits from the underlying shares.

A key benefit of a SMA investment is that unlike a managed fund, you are not invested in ‘common’ units, but rather the underlying shares are recognised as held for your account. This means if assets are sold, you will pay tax on your share of the profits from the date you joined the portfolio, not from the date the portfolio started, nor for realisations for other investors. This means you will not ‘inherit’ capital gains from previous events, or other investors’ actions.

When you invest in SMA’s via an administration platform, this allows you to have a ‘single view’ of your Australian share holdings via your statement or your online account. This gives you instant access to reporting and allows you to determine your overall portfolio returns, and easily compare to relevant benchmarks.

JustInvest and Ethical Investment Advisers developed these ethical share portfolios for our clients to access in their Superannuation (including SMSF’s), Pension and Investment accounts. Our investment process includes:

  • Applying a negative screen to all the shares listed on the ASX to remove from consideration all the companies that have unwanted direct or indirect industry exposures
  • Applying a positive screen to rank the remaining companies in order of the Environmental, Social and Governance (ESG) scores
4 Risk Return trade-off for the last ten years
Risk Return trade-off for the last ten years (Source: InvestSense, 2015)

NEGATIVE SCREENING

  • No direct or indirect exposure to:
    • Fossil Fuels
    • Uranium
    • Defence Industries
  • No direct exposure to:
    • Other extractive Industries
    • Gaming
    • Alcohol
    • Tobacco

POSITIVE SCREENING

The portfolio is designed to hold fundamentally high quality companies, with a bias against the most expensive (overvalued) stocks in the market, after screening for ESG factors. The bias towards companies with high ESG ratings is created utilising rankings from research houses Sustainalytics and CAER (Corporate Analysis. Enhanced Responsibility).

A key focus of the portfolio is to find companies which are involved in positive environmental activities or which provide benefits to society, such as healthcare, renewable energy, energy efficiency and technology, food, water, sustainable agriculture, education, community development and social welfare. We then construct the portfolio with an overlay of a forward looking valuation assessment, a size and sector bias, and back testing.

 

Note: These portfolios are only recommended to clients in conjunction with our financial advice process. This involves detailed consideration of your financial objectives and considers your risk profile, ethical criteria and other factors relevant to your individual situation. Past performance is not an indicator of future performance.

Get in Touch..

Contact Us Speak to JustInvest Financial Planning today on (08) 9322 1110 or send us an email to find out how investing ethically can help you grow your wealth.