AJ Bell has launched a new passive option, the Responsible Growth Fund, to meet growing demand from advisers and their clients.
The Responsible Growth Fund, which was designed following a survey of AJ Bell’s direct customers and a consultation with advisers, aims to have a carbon footprint 40% lower than investing in a portfolio of global shares.
It will invest in responsibly screened ETFs that remove stocks from controversial businesses such as tobacco or alcohol. Any company that breaches the UN Global Compact is also excluded.
Once these companies are removed, ones with strong ESG factors are included to give a diversified exposure to different regions and sectors, with better than average impact on both people and the planet. Top holdings include the iShares MSCI USA SRI ETF, the UBS MSCI World Socially Responsible ETF and the Xtrackers ESG MSCI Emerging Markets ETF.
“Advisers have been asking for a low-cost and easy to understand responsible investing option,” head of passive portfolios Matt Brennan told ESG Clarity. “We have always advocated for simple-to-understand funds for advisers and investors, and we recognise the importance of transparent reporting.”
Brennan holds the CFA: Certificate in ESG Investing qualification, and AJ Bell said the fund was designed by experts with knowledge of ESG investing, as well as predominately using MSCI-screened investments.
AJ Bell explained its reasoning for only launching one fund at this time was due to the smaller number of responsible bond and alternative funds, which makes it more difficult to build products at the lower-risk end of the spectrum.
“Within responsible investments lots of ETFs and funds are available that cover equities,” it said. “In contrast, responsible bond and alternative funds are smaller in number and follow various different methodologies. For this reason we have decided to focus on ETFs and launch only one fund initially. However, we believe lower-risk portfolios could be constructed at this stage with the Responsible Growth Fund as the equity component, included alongside individual bond fund investment.”