IBOSS is the latest UK wealth management firm to launch a sustainable model portfolio service for clients.
The IBOSS Sustainable Managed Portfolio Service (MPS) has six risk-rated strategies each investing in 35-40 underlying sustainable funds. Fees start at 0.50% (OCF) for the lowest risk mandate and reach 0.72% for the highest risk (See table).
The new range will sit alongside the groups existing Core, Passive and Income portfolios and will eventually reflect their active/passive split of 25/75, but at launch the sustainable range has some 93% invested in active funds.
Chris Metcalfe, investment and managing director at IBOSS, explained: “As with our core range, we have opted to make use of passive funds alongside active managers. It is our view that this blend in styles can add significant diversification benefits, whilst reducing overall costs.
“That being said, and whilst there has been a wealth of ESG index launches over the last number of years, we suspect there are still improvements to be made in the makeup of underlying indices and the range of passive ESG funds available. We would therefore expect to hold more passive strategies in the range over the next number of years and the costs of the portfolio to reduce further.”
The asset allocation of the sustainable range also closely mirrors that of the firm’s existing core MPS.
Many wealth management firms have been reshaping propositions or launching new ranges to meet demand for responsibly invested solutions. In July, Waverton Investment Management launched an ESG overlay to investors using their model portfolio or bespoke services, while Alpha FMC recently launched its a standalone ESG practice. AJ Bell has also added to its responsible investment range, and Brewin Dolphin appointed BMO GAM as engagement partner of a £12bn portfolio to beef up its proposition.
This is also amid criticism that UK asset owners have been lagging fund managers in terms of meeting demand for ESG products.
Metcalfe noted the IBOSS has offered ethical portfolios for over 12 years but appetite for a sustainable range has grown recently.
“We have always known that there is no ‘one size fits all’ for clients when it comes to investing and have always taken the needs of clients who want to invest responsibly via sustainable funds very seriously,” he said.
“Over recent years we have witnessed client demand increase for the option of an investment strategy which seeks to consider both financial return and social/ environmental impact. Following this demand, our investment team have been working hard to create a sustainable range of portfolios for almost a year.
“We expect that the focus on ESG credentials is here for good and for all funds as the once ‘younger’ generation gets older. It is for this reason that we have taken our time to ensure our new range is fit for purpose.”
The Sustainable MPS will be available on Aviva, Novia and Transact and potentially other platforms in the near future.