Endowus launches ESG multi-asset portfolios
Firm aims to meet growing interest in sustainable investing, address lack of knowledge in ESG investing
Singapore
DIGITAL wealth adviser Endowus has launched multi-asset portfolio offerings with an eye on environmental, social and governance (ESG) metrics for retail investors, which it says is a first in Asia.
There are six funds in varying combinations in the portfolios, from firms such as Schroders, PIMCO and Mirova. Two funds - the JPMorgan Global Bond Opportunities Sustainable Fund and the PIMCO GIS Climate Bond Fund - are exclusively available via Endowus.
In a statement, Endowus said a survey of 1,100 in Singapore found a strong and growing demand for more ESG investment options. The survey found that while ESG investing resonates with over 93 per cent of respondents, only 28 per cent currently hold any ESG funds.
There are a number of common themes behind the apparent hesitancy. Fifty-eight per cent acknowledge a lack in their own understanding or knowledge of ESG investing, while 43 per cent point to a dearth of good available options.
Endowus chief investment officer (CIO) Samuel Rhee said the ESG portfolios are aimed at addressing these issues while meeting growing investor interest in investing sustainably.
"We are proud to be Asia's first digital wealth adviser to launch multi-asset ESG offerings, empowering individual investors to secure a better financial future for themselves while also making a positive impact on society and the planet," he said.
Endowus has conducted its own due diligence on the offerings. The portfolios are put together based on combinations of 100 per cent equities, or an 80:20 ratio of equity to fixed income, or 60:40, depending on the client's risk appetite.
"We go through a process of looking at hundreds of ESG, sustainable, responsible and climate funds for both equity and fixed income, and then select and curate the best ones we can find," said Mr Rhee."
"We do the due diligence on each fund manager - Natixis-Mirova; Schroders, JP Morgan Asset Management (JPMAM), Robeco-UOBAM, and PIMCO - and on the products, how well they are managed, how robust is the ESG framework and investment process," he explained.
"We optimise them into a portfolio so that it is a ready-made solution that is multi-asset, multi-manager, globally diversified and low-cost."
Endowus seeks to reduce investment cost by onboarding the institutional share classes of funds, which do not pay a trail fee. Trail fees are the portion of the fund's annual management fee typically paid to distributors. If the institutional share class is not available, the trail fees are rebated to investors.
Mr Rhee said Endowus undertakes a number of measures to ascertain the funds' sustainability credentials. The managers should be leaders in the field with decades of experience in the asset class, for instance.
"The industry has moved from simple negative screening - or just removing 'sin' stocks - to positive screening, active stock selection of best-in-class sustainable companies, and even active ownership and engagement to improve a company's ESG score to generate alpha," he said.
"We're working with fund managers who are at the cutting edge and leading the industry in the implementation of the global best practices of ESG investing."
The firm employs a "multi-dimensional" screening methodology to screen hundreds of funds on various metrics.
There is also an overlay of qualitative due diligence to incorporate analyses of whether the company and the investment team are "walking the walk and not just talking the talk", he said.
The six funds are: Mirova Global Sustainable Equity Fund, Schroder ISF Global Sustainable Growth Equity Fund, Schroder ISF Global Climate Change Fund, JPM Global Bond Opportunities Sustainable Fund, PIMCO GIS Climate Bond Fund, and UOB United Sustainable Credit Income Fund.
Schroders Singapore chief executive and co-head of Asia Pacific Susan Soh said Singapore is the firm's regional centre of excellence for sustainability, adding that "we are delighted to see more sustainable solutions offered to investors here, who have always been forward-thinking, and are becoming more conscious about the ESG impacts of their investments."
Kimberley Stafford, head of PIMCO Asia Pacific, said the PIMCO GIS Climate Bond Fund is the firm's first dedicated climate bond strategy.
"PIMCO believes fixed-income investments have a uniquely important role in financing the transition to a net-zero-carbon economy, with the potential to also deliver attractive returns for investors," she said.
"Recognising that climate change will have a profound impact on the global economy, financial markets and issuers, we have developed tools and methods that over time seek to incorporate climate risk evaluations in our investment research processes."
