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A multi-asset approach to sustainable investing

21 Apr, 2021 | Return|

By Maria Municchi, Fund Manager of the Sustainable Multi Asset Fund Range at M&G Investments

Sustainable investment strategies should look to the future, aim to achieve objectives that include more than meeting financial goals. Preserving our planet’s resources, recovering its climate and making life better, more equal and inclusive, are also important to investors.

Diversification in sustainable multi-asset strategies, stretches beyond traditional asset classes such as equities, bonds and cash, to include infrastructure, green bonds, social bonds and speciality funds offering investors the opportunity to spread their risk.

Equities provide an ownership stake in businesses following a sustainable business model, or are transitioning towards one. Bonds represent lending to companies or other entities taking a responsible approach, or even to directly fund specific projects or initiatives that aim to make a positive difference.

We believe that adopting a global perspective allows us to capture the widest opportunity set for our investors and reflects the fact that the challenges the world faces are not confined to individual geographies either.

As greater and more detailed analysis on companies may now be involved in sustainable investment approaches, it may require extensive resources, which may only be available to larger organisations.  This includes being able to assess the work companies are doing to meet their sustainability objectives, as well as identifying and measuring their achievements.

Considerations of how a potential investment may be judged on its environmental, social and governance (ESG) behaviours and contributions have now been integrated into our investment process. These have joined existing first stage sector and industry exclusions, in addition to assessing adherence with United Nations Global Compact Principles. We believe that applying a positive ESG-tilt, looking to focus on entities that have more positive ESG characteristics compared to their peers, should form a core element of building portfolios of sustainable assets.

We seek to engage with companies to gain clearer insights into the sustainability of their business plans and processes. Engagement can help clarify investor understanding, encourage greater transparency and identify tools to measure progress towards sustainable objectives. Beyond that, we also seek to incorporate investments that actively aim and intend to make a positive impact on some of the world’s pressing environmental and social challenges.

Investing to sustain the planet’s resources and improve its social well-being and future, can sit alongside seeking to achieve financial security. M&G feels equally strongly about that and has been developing processes and products to help meet those goals.

Screenshot2021-04-14...

Source: M&G, January 2021

To meet demand for a sustainable product from investors with different appetites for risk and financial returns, M&G has launched a new range of sustainable multi asset funds. Spread across cautious, balanced and growth profiles, these actively-managed, risk-targeted solutions combine strategic and dynamic asset allocation decisions originating from our long-standing Multi Asset team, invested in assets that incorporate positive ESG-tilt and positive impact characteristics. All those decisions are encompassed with an overarching climate focus, which concentrates on carbon intensity and climate adaptability, which we believe is crucial to achieving a more sustainable global economy.

The value of a fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.

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