Sustainable Ethical Allocation Portfolios – September Update

Sustainable Ethical Allocation Portfolios


The Importance of Quality – The quality of the underlying assets and the Fund Managers has once again resulted in superior portfolio performance this month…….. this Quarter…….. this Year


The month of September did see a significant return of volatility in equity markets, especially with the top performing Technology sector in the US. The fear of a slower recovery out of this current covid19 situation resulted in substantial falls across equity markets around the world…… and the Sustainable Ethical Allocation Portfolios were not immune from this.


However, due to the quality of the underlying Fund Managers and the diversified nature of the portfolios, we were able to reduce the short term volatility and limit the downside, and yet still achieved positive returns for the month.


Performance for September 2020

A. 1.10% – Cautious Allocation
B. 1.30% – Balanced Allocation
C. 1.90% – Growth Allocation


Our exposure to the Baillie Gifford funds within the Sustainable Ethical Portfolios were the main drivers for the positive performance once again this month. As announced in our last update, we have included Liontrust Fund Partners across the Sustainable Portfolios which not only assisted with the upside performance, but also with the short term volatility.


Not all of the funds were positive for the month, with our exposure to Emerging Markets being slightly lower (-0.4%) for the month and our exposure to the UK market funds being flat to slightly lower (0% to -1%).  


The cautious fixed interest type funds recovered from last months slight pull back with all of the holdings performing positively for September.


2020 and the Performance So Far….


As was commented in previous months portfolio updates, the Sustainable Ethical Allocation Portfolios have been very successful in minimising the volatility and market falls we experienced back in February & March.


However, investors have been rewarded with positive returns year to date:

25% – Growth Allocation, 19% – Balanced Allocation and 14% – Cautious Allocation. This compares to the FTSE All Share Index which is still struggling this year, down 20% over the same period.

A. Cautious Allocation
B. Balanced Allocation
C. Growth Allocation
D. FTSE All Share Index


Strategy Going Forward….


As discussed last month, we added a new allocation to Liontrust Fund Partners across all 3 Sustainable model portfolios, which further diversified the various investment styles of our quality Fund Managers. This will potentially result in clients not only continuing to achieve market leading performance, but reducing the short term volatility.  


We are happy with the current diversified asset allocations as well as the underlying Fund Managers and as such, we will not be making any changes to the portfolios.


While we are enjoying good solid positive returns with many of our equity funds, we are very mindful that our portfolios need to remain well diversified and that they do not get significantly ‘overweight’ to a specific asset class or sector.


As mentioned earlier in this report, we have experienced an increase in short term volatility this month (which we did forecast in the previous months update). With the ongoing uncertainty surrounding covid19 and how will the global economy rebound, plus the upcoming US Presidential elections as well as the ongoing saga that is Brexit, we would expect that this higher level of volatility to continue for the rest of this year


However, I still hold a very positive medium to longer term view on the funds held in the portfolios and while we should expect to experience short term volatility (which will include periods of negative returns), I do believe that the funds held will result in superior medium to longer term positive returns.


As part of our ongoing client management, we stress the importance of ensuring that investors maintain sufficient cash (or very low risk, liquid assets) that can be called upon to cover their short-term income and / or capital purchase requirements. I strongly believe that this is even more imperative now due to the extremely uncertain and unprecedented economic and market conditions we are experiencing.


The other area that we encourage investors to look at is that of diversification…….. the Sustainable Allocation Portfolios are well diversified with not only asset type (equities, bonds, cash) but ensuring that there is also diversification of geographical region.


The underlying Fund Managers (Baillie Gifford, Royal London, Rathbones, Vanguard for example) will also take a different approach and style to their investment strategies and by blending these different managers and investments styles & strategies, potentially will result in lower volatility and more consistent overall portfolio returns.


Investors can also further diversify their portfolios through the use of Structured Notes. While Structured Notes are not our core investment offerings (we prefer the use of liquid, daily traded funds, ETF’s and direct shares), they can provide an opportunity to reduce short term volatility while receiving a pre-determined (conditional) investment return. But it must be stressed that Structured Notes are generally regarded as longer term investments so timeframe and whether access to capital is required needs to be seriously considered. 


Please click the below link to get information on the range of Structured Notes currently available via Ethical Offshore Investments.     


If you would like to receive further information on the Sustainable Ethical Allocation Portfolios or on the underlying individual Managed Funds, please click REQUEST MORE INFORMATION.   



 Sustainable Ethical Allocation Portfolios


The Sustainable Allocation portfolios are currently invested in 10 – 12 different managed funds, utlising the expertise of the following Fund Managers.




Cautious Allocation


The SUSTAINABLE ETHICAL CAUTIOUS ALLOCATION PORTFOLIO will generally have approx. 65% of the assets invested in various bond, fixed interest and cash type assets that are regarded as lower risk type assets. The remaining will be allocated in growth style of equities and infrastructure type assets.


The objective of this allocation is to achieve a net return of 5%-6%PA but with lower levels of short term volatility.

  • A. Sustainable Ethical Cautious Allocation
  • B. IA Mixed Investment 20-60% Share Index


Balanced Allocation


The SUSTAINABLE ETHICAL BALANCED ALLOCATION PORTFOLIO will have approx. 65% of the allocation invested in growth type assets such as equities and infrastructure with the remaining allocated to more cautious type assets such bonds, fixed interest and cash type assets.


The objective of this portfolio is to achieve similar type returns associated with direct equity investing, while experiencing lower levels of short term volatility, especially during negative market periods.

  • A. Sustainable Ethical Balanced Allocation
  • B. IA Global Index


Growth Allocation


The SUSTAINABLE ETHICAL GROWTH ALLOCATION PORTFOLIO will invest in a range of equity and growth style funds and is designed for the longer term investor that can accept higher levels of short term volatility.


The objective of this allocation is to achieve a net annual return of 10% – 12%pa but clients need to be aware and accept that there will be higher levels of short term volatility and periods of negative returns.

  • A. Sustainable Ethical Growth Allocation
  • B. IA Global Index