For UK financial advisers only, not approved for use by retail customers

Meeting client demands around sustainability

ESG (Environmental, Social and Governance) and sustainability are now key factors for investors when making decisions about their portfolio. Julia Dreblow and Fund EcoMarket provide excellent resources to help advisers, wealth managers and paraplanners get the detailed information they need. Following on from last month’s article, we take a deeper dive into the Fund EcoMarket tool and consider what users have been actually searching for when using the tool to support their ESG needs.

For advisers and paraplanners, getting access to all the detailed information they need on responsible investment funds in order to help clients make appropriate investment decisions is no straightforward matter. Julia Dreblow has been a leading light in this arena for many years. As an undoubted expert in the field of sustainability and ESG, she and her team at SRI Services have developed Fund EcoMarket, the sustainable, responsible and ethical investment information hub. It is a readily accessible resource which intermediaries can use to help them deliver efficient and effective advice for clients around matters of sustainability.

We’ve taken a look at the latest report which relates to activity from 1 January – to 30 June 2021. It details and discusses usage of Fund EcoMarket – the SRI Services’ fund database tool. The tool lists all regulated, retail, onshore sustainable and responsible investment funds and related ESG, ethical and similar options (plus select additions) – focusing on the ‘ESG’ aspects of their strategies.

Fund EcoMarket is designed for UK financial advisers and other intermediaries but is open to all. The database is now 10 years old and has segmented relevant funds by ‘SRI Style’ since launch. It is free to use thanks to the support of 19 fund manager partners.

Largest and most often searched for SRI styles

Funds on Fund EcoMarket are split into ‘SRI Styles’, this is their own classification system, that helps users recognise core fund similarities and differences. They have classified funds by SRI Styles for 10 years and the system is regularly amended to take account of market changes.

Sustainability Themed funds. This is the largest and most often searched for ‘SRI Style’ which are funds with deep dive sustainability strategies. They classify 96 funds as Sustainability Themed. This filter was the second most popular search option after ‘OEIC’.

Many Sustainability Themed funds (68) ‘Aim to generate positive impacts and outcomes ’ (a filter option). 51 of these also ‘Measure positive impacts’, meaning that 51 Sustainability themed funds meet the two core requirements for being regarded as an ‘impact fund’ -although only 9 of these say their funds are ‘Described as an impact investment fund’. This points to variations in methodologies as well as intentionality (wider aims). Sustainability Themed funds make up approximately half of the funds that say they ‘Aim to deliver positive impacts’ and ‘Measure their positive impacts’ (51/100). The other half are funds classified as Ethical, Social and Environmental Themed – which indicates significant variations in impact related and stock selection strategies.

Environmental Themed funds. These were the second most searched for SRI Style, ranking 6th in the overall searches. This style comprises 47 (primary) funds. Their strategies are highly diverse, ranging from focusing on a single sector to broad based multi asset approaches. Their emphasis on impacts and outcomes also varies.

Ethical funds. During Q1 Fund EcoMarket changed the classification for ‘Ethical’ funds (41 fund options) – bringing their previous ‘Balanced Ethical’ and ‘Negative Ethical’ classifications together. If the new classification had applied from January ‘Ethical’ would have been the 4th most commonly searched (overall) filter option. In their opinion, the continued appeal is most probably the result of a combination of factors – including the typically extensive and thoughtful nature of these strategies, their being well established and developed, and the fact that most now significantly integrate sustainability issues into their methodologies.

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