R-Factor scores and that cannot articulate how they plan to
improve their score.”
Across the pond, Norges Bank Investment Management,
the world’s largest sovereign wealth fund with $1.13 trillion,
recently called for businesses to improve metrics to ensure
they disclose “relevant, quantitative and comparable informa-
tion on ESG issues.”
Likewise, the Business Roundtable, made up of some of the
largest companies in the United States, proclaimed last year
that it was pushing toward “stakeholder” importance, and
lessening the focus on shareholder returns.
All of this means ESG is not going away anytime soon, and
as Larry Adam, Raymond James chief
investment officer, explains: “Moving
forward, we believe there is still work to
be done to define the standards that can
be more universally applied to differ-
ent industries and companies so inves-
tors can fully understand and appreciate
what they are investing in.
“One thing for sure is there is growing
evidence that non-sustainable firms are
facing ever more pressure to conform,
including increasingly higher costs of
capital, greater shareholder activism
and capital outflows,” he said.
And advisors should take note that
“sustainable investing is no longer confined merely to institutional or millennial investors, but now comprises all
demographics and investor classifications,” Adam added.
But despite this growing demand,
many advisors still seem reticent to
learn more about and to discuss these
products with their clients. Ann Senne, head of Advice
and Solutions for RBC Wealth Management, acknowledges
the advisor quandary, but says her firm has been active in
developing portfolio models that are focused on sustainable
investing, which have captured advisor interest.
“While we don’t disclose raw asset inflows, that data is
proprietary, the interest from advisors — and their clients —
has been very strong [for RBC],” Senne said. “Client assets
flowing into the funds have grown swiftly since launch [of
RBC’s SI model portfolios]. In fact since [early March],
inflows have jumped another 10% — despite a steep drop in
the broader markets.
firearms, thermal coal extraction, tobacco and UN Global
Compact (sustainability principles) violations.
Issuers in the financial services sector are excluded from
this initial screening process but could be screened out under
other ESG criteria.
New Model Portfolios
Wisdom Tree recently launched two multi-asset, open architecture model portfolios designed to challenge the traditional
60/40 portfolio approach.
The new Siegel-Wisdom Tree Global Equity Model Portfolio
and Siegel-Wisdom Tree Longevity Model Portfolio were devel-
oped in a collaboration between the firm and Jeremy Siegel, its
senior investment strategy advisor, professor of finance at U
Penn’s Wharton School and author of “Stocks for the Long Run.”
The new portfolio products should help advisors “deliver
a solution [so] that their clients could generate income in
retirement, [and] also manage their longevity risk because
people are living longer and will need their assets … for longer
periods of time than they have in the past,” said Tom Skrobe,
Wisdom Tree head of product solutions.
The portfolios are “heavily allocated to equities … in seek-
ing to mitigate the longevity short-fall risk,” and feature an all-
exchange-traded fund portfolio structure that Wisdom Tree
said helps to “optimize tax-efficiency.”
Although the Longevity Model Portfolio is strategic in
nature, the firm said it also “reflects tactical tilts based on
market conditions. It is “not a static model,” Siegel said. “If
one asset class suddenly does not look favorable for one rea-
son or another, we will reduce that asset allocation.”
Source: Morningstar. Data as of 12/31/2019
Note: Includes ESG Integration, Impact, and Sustainable Sector funds as defined in Sustainable Funds U.S. Landscape
Report, 2018. Includes funds that have been liquidated; does not include funds of funds
Sustainable Funds Estimated Annual Flows
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019