This new suite, called Impact Quantitative Portfolios, is managed by Envestnet’s portfolio consulting group Envestnet | PMC.
To meet the growing demand for impact investment products, Envestnet developed the new climate change, ESG, and gender lens investing portfolios in partnership with Sustainalytics and Veris Wealth Partners.
“These targeted portfolio solutions can empower advisors to demonstrate more value for clients who wish to align their investments with their personal interest in making a positive impact—a trend that has been increasing, particularly among Millennials and women,” Jim Lumberg, co-founder and executive vice president of Envestnet, said in a statement.
Each portfolio contains a subset of the companies in a major market index, and is designed to mimic the portfolio characteristics of the index as a whole.
Using ESG scores from Sustainalytics, PMC optimizes each portfolio toward high-impact stocks. PMC then utilizes a proprietary risk model to develop and enhance target portfolio characteristics, and reviews the portfolio to ensure the target characteristics have been met. The portfolios can be adjusted at the security and industry levels to accommodate each client’s unique circumstances.
The Impact Quantitative Portfolios are managed using tax-smart techniques and capabilities to position the portfolios for potential “tax alpha” that can add up to 60 basis points of value annually, according to PMC’s research.
“The launch of these innovative products is a milestone event for impact investing,” Diederik Timmer, executive vice president of institutional relations at Sustainalytics, said in a statement. “The Envestnet | PMC Impact QPs will help advisors fully optimize ESG investment strategies while offering long-term intrinsic value to their clients.”
The Quantitative Portfolios hold fewer positions to minimize turnover, and rebalance only upon corporate actions or when positions’ natural price movements violate tracking error constraints. To prevent overtrading, PMC weighs tax-loss harvesting opportunities—which occur when losses exceed the prescribed minimum threshold—against risk and trading costs. PMC also possesses the capability to manage portfolios according to client-specific complex tax situations.
Other top portfolio products:
Scivantage to Partner With Morningstar to Deliver Data to Digital Wealth Management Platform
The new agreement will embed access to high-quality content from Morningstar and create a seamless workflow in the Scivantage Investor digital wealth solution, according to an announcement. The integration of Morningstar content and components with Scivantage Investor is scheduled for Spring 2017.
SSGA Expands Suite of ESG ETFs
State Street Global Advisors (SSGA) has developed two new exchange-traded funds to address growing client demand for environmental, social and governance strategies and help investors divest from companies owning fossil fuel reserves, according to an announcement. SPDR MSCI EAFE Fossil Fuel Reserves Free ETF (EFAX) and the SPDR MSCI Emerging Markets Fossil Fuel Reserves Free ETF (EEMX) began trading on the NYSE Arca.
Hartford Funds to Adopt 10 of Schroders’ U.S. Mutual Funds
Hartford Funds and Schroder Investment Management North America finalized its strategic relationship first announced in June 2016, whereby Hartford Funds has adopted 10 of Schroders’ U.S. mutual funds, according to the press release.
Beaumont Capital Launches Smart Beta Solutions Targeting Alpha and Downside Protection
Beaumont Capital Management is striving to use smart beta to pursue alpha with its new smart beta solutions, the BCM Paradigm Series. According to a press release, the Paradigm process seeks risk-adjusted returns and downside protection through rules-based analysis of investor behavior by identifying shifts between “normal” and “volatile” markets.
CentSai Targets Millennials With New Resource
CentSai, the financial wellness community, announced a new resource for its mainly millennial users called CentSai Experts, which will provide content and resources credentialed financial advisors, financial coaches, lawyers, financial educators and therapists.
Vanare and FinMason Integrate to Deliver Risk Analytics
Vanare selected FinMason, the financial education technology firm, as a key partner for quantitative risk analysis within Vanare’s wealth management technology platform and white-labeled robo-advisor platform, according to an announcement.
— Read the October 24 top portfolio products roundup.