FE Investments introduces client centric sustainable investment reporting

FE Investments model portfolio service has launched a proposition to offer sustainable investment reporting for retail investors.

The new reports which are available for FE Investments’ Responsibly Managed portfolio range include information that helps investors understand the impact their investments are having, including an environmental overview of the portfolio (including measurements relating to fossil fuels, nuclear power, green energy and pollution prevention), exposure to controversial industries (such as alcohol and tobacco) and key social and governance metrics (such as gender and ethnic diversity breakdowns at executive level within underlying holdings).

Rob Gleeson, Chief Investments Officer at FE Investments, said:

“Although ‘ESG’ has become the catch-all term within the industry, it is not particularly helpful for financial advisers when discussing investment options with their clients. No retail client wants an ‘ESG’ portfolio; they want to make investments which adequately reflect their beliefs. ‘ESG’ and the grouping together of these disparate and sometimes conflicting themes is an institutional solution which is not meeting client demand. Instead, investors want to know their investments are doing less harm, doing more good and delivering on risk and returns. We have developed a unique proposition that seeks to delve deeply into the sustainable aspects of investing, beyond what is currently available through existing ESG reporting solutions.”

The enhanced Responsibly Managed reporting function also acknowledges that no investment will ever be fully free from sustainable concerns. The reports provide advisers with additional information allowing them to identify and explain to clients why their portfolios may hold a certain position, even if the underlying company may not initially be seen as a sustainable investment.

Rob Gleeson added:

“The simple fact is that when it comes to sustainable investing, we cannot allow the pursuit of perfection to stop the progress of ‘good’. The issue of reporting in sustainable investing is highly complex and what we aim to do is to provide the adviser with as much information as possible to discuss with clients. A good example of this is a fund which holds bonds issued by Transport for London (TFL). TFL has, by the nature of its industry, a high carbon footprint, but its ultimate ambition is to reduce carbon emissions by taking private vehicles off the road. Within the reporting, this is clearly set out with an ESG analysis of the fund, allowing the adviser to be able to answer any questions their clients might have.”

The new sustainable reports also include information that investors expect from standard reports, including costs, performance and risk. They also help advisers to manage their obligations under new UK regulations which are based on updates to MiFID II, requiring advisers to assess sustainable investment preferences prior to making a recommendation.

FE Investments’ Responsibly Managed range of portfolios were launched in 2017 and expanded in 2020 to offer a choice of 15 risk-optimised portfolios spanning three investment time horizons, of short, medium and long term. Since their launch, the range has grown rapidly in popularity, seeing an increase in assets under management (AUM) of 125% last year alone. With three-years of performance data, the portfolios allow for greater analysis compared with other solutions which are in their infancy.