The range of products and investment strategies claiming to meet ESG standards of responsibility has multiplied. To help advisers better meet their clients’ needs, North has designed a sustainable managed portfolio with three risk profiles. In this article, we break down the strategy behind this portfolio.

ESG investing has become a major force in Australia, with 17% of Australians already investing in ethical companies, funds, or superannuation accounts – and a further 26% seriously considering doing so within the next 12 months, according to research from the Responsible Investment Association Australasia (RIAA).

Unfortunately, the lack of standard definitions within this market segment means there is a huge variation in ESG credentials, even among businesses claiming to be ‘responsible’.

This can make navigating the ESG market surprisingly difficult, even for professionals. For mum and dad investors, it can make trying to invest responsibly almost impossible.

That’s why North has designed a sustainability-focused managed portfolio offered in three risk profiles, providing advisers with a simple and efficient way to help clients invest in line with their personal values.

 

Our core ESG principles

MyNorth Sustainable Managed Portfolios have been developed by AMP’s CIO Research team, with support from specially selected service providers. These are sustainable investment specialist Regnan, which has assisted with designing the ESG framework, and investment manager Pendal, whose multi-asset team is responsible for both portfolio construction and asset allocation.

The portfolio is available in three risk profiles – moderately conservative, balanced, and moderately aggressive – and focuses on three core ESG principles.

  • The transition to a low-carbon economy
    Selecting underlying funds that have investment processes that consider a company’s impact on the environment. The underlying funds in the portfolios employ investment process that consider a company’s impact on the environment.

  • Avoiding material investment into certain industries
    MyNorth’s Sustainable Managed Portfolios do not make material investments in gambling, tobacco, thermal coal, pornography, or controversial weapons. We take care to select underlying funds that seek to avoid exposure to investments in these activities and industries and derive no more than 10% of their revenue from these activities.

  • Encouraging positive social outcomes
    Investing in underlying funds whereby the fund manager has committed to influencing the companies they invest in with respect to ESG matters through ongoing constructive engagement and proxy voting.

 

Choosing the right investment managers

A total of seven investment managers manage money across the different asset classes held within the sustainable managed portfolios. These include:

  • Alphinity
  • Ausbil
  • Impax Asset Management
  • Macquarie
  • Pendal
  • Pimco
  • Vanguard

These managers have been carefully chosen by AMP’s CIO Research team based on a detailed set of criteria. These criteria have been developed specifically to align the selected investments with the overarching portfolio’s principles and help advisers more readily navigate ESG markets on behalf of their clients.

These criteria include:

  • How an investment team translates its sustainable investing philosophy into their investment process.
  • How much weight is placed on ESG issues in portfolio construction and other investment decision-making.
  • How investment managers work with companies to effect change (including through proxy voting).
  • How the investment team applies its ESG resources and other proprietary tools to manage their portfolios.
  • How well the investment managers align with external ESG standards they aspire to. Examples of these include the United Nations’ Principles of Responsible Investing and the Responsible Investment Association Australasia’s certification.
  • How the investment managers reference external ESG ratings.
     

To learn more about our sustainable portfolio series, reach out to a North Business Development Manager.

 


1. Banhalmi-Zakar Z & Parker E, From Values to Riches 2022: Charting consumer demand for responsible investing in Australia, Responsible Investment Association Australasia, March 2022, accessed 24 February 2023.

 

 

What you need to know

The information on this page has been provided by NMMT Limited ABN 42 058 835 573, AFSL 234653 (NMMT). It’s for professional adviser use. It contains general advice only and doesn’t consider a person’s personal goals, financial situation or needs. A person should consider whether this information is appropriate for them before making any decisions. It’s important a person considers their circumstances, ESG values and reads the relevant product disclosure statement and target market determination, available from northonline.com.au or by contacting the North Service Centre on 1800 667 841, before deciding what’s right for them.

You can read NMMT's Financial Services Guide online for more information, including the fees and benefits that companies related to NMMT, N.M. Superannuation Pty Limited ABN 31 008 428 322, AFSL 234654 (N.M. Super) and their representatives may receive in relation to products and services provided. You can also ask us for a hard copy. The issuer of MyNorth Managed Portfolios is NMMT. NMMT issues the interests in and is the responsible entity for MyNorth Managed Portfolios through which MyNorth Sustainable Managed Portfolios is offered.

MyNorth is a trademark registered of NMMT. NMMT has appointed Pendal Institutional Limited ABN 17 126 390 627 AFSL 316455 as investment manager for MyNorth Sustainable Managed Portfolios.