Independent research business RSMR has added a new RSMR Responsible Growth portfolio to its Responsible Managed Portfolio Service (MPS). There are now four risk profiled portfolios in the RSMR Responsible MPS in Dynamic Planner – alongside the RSMR Rfolios MPS range of risk profiled portfolios.

Stewart Smith, RSMR Head of Managed Portfolio Services, said: “The RSMR MPS offers advisers attractive, cost-effective options to align with the most frequently selected investor risk profiles in Dynamic Planner.

“The RSMR Responsible portfolios provide a pragmatic solution for advisers seeking greater exposure to responsible investment supported by a rigorous fund research process.”

What is RSMR’s approach to ESG?

Stewart Smith: “ESG factors represent potential risks to any fund’s holdings, irrespective of the fund’s badge. Therefore we consider ESG to be an integral part of the research process for all funds we assess, monitor and ultimately rate.

“RSMR introduced Responsible fund ratings back in 2012 (called SRI ratings at the time and subsequently renamed) in response to demand. For us, funds with a Responsible rating go beyond ESG investing with each of the 44 RSMR Responsible rated funds needing to satisfy our additional criteria.

“As part of our Responsible fund rating process, we determine which of the four RSMR Responsible categories the fund belongs in. Funds can then be further subdivided at a more granular level.”

  1. Sustainable – Funds that select and include investments on the basis of responsibly contributing to and benefiting the global sustainable economy. This may include referencing the portfolio to one or more of the UN Sustainable Development Goals (SDGs) or the application of a screen.
  2. Impact – Funds that can demonstrate they are aligned to the Global Impact Investing Network’s definition of Impact, ‘Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return’.
  3. Thematic – Funds that use macro themes to identify long-term responsible structural growth trends.
  4. Ethical – Funds that apply a screen, either positive, negative or both, that may be based on ethics or on a ‘best in sector’ approach. Each fund will have its own defined screen and may vary between providers.

How did the RSMR Responsible MPS come about?

Stewart Smith: “As the RSMR Responsible fund universe continued to grow, we launched the RSMR Responsible Balanced Portfolio in June 2016, initially as an advisory portfolio but then converted to a discretionary portfolio in March 2018, at which point we also added the Responsible Cautious and Responsible Dynamic portfolios.

“We have been running standard and Responsible (or SRI) client portfolios comprising RSMR rated funds for advice businesses much longer than that.

“We have taken the opportunity to broaden our offering in the Responsible investing area through the launch of the Responsible Growth Portfolio, which means we can offer advisers four RSMR Responsible portfolios, risk profiled by Dynamic Planner at risk levels 4, 5, 6 and 7 respectively.”

How does RSMR construct and manage its MPS?

Stewart Smith: “RSMR’s MPS investment approach is designed to be easily explained by the adviser and easily understood by the client, and has achieved strong and consistent past performance.

“It begins with putting together a strategic asset allocation for each portfolio. The intention is for this to be relatively stable over time and not be influenced by any market timing decisions.

“Ours is a forward-looking approach, considering the various longer-term risk and return expectations for the relevant asset classes relative to their history. Our information and data are drawn from a wide range of industry sources to form a consensus of the investment factors which may drive returns in the future, for example valuation levels, interest rate and inflation expectations, economic growth rates and so on.

“Whilst we hold formal discussions on asset allocation quarterly, any new information relevant to asset class views, and any potential portfolio fund changes, are frequently discussed within the RSMR team.”

What does the Responsible Growth portfolio look like?

Stewart Smith: “While our allocations and fund choices will vary over time, the initial asset allocations are 37.5% International Equities, 27.5% UK Equities, 26.0% Fixed Income, 5.0% Multi-Asset and 4% Cash. The Portfolio’s IA benchmark will be Mixed Investment 40-85% Shares.

“Our fund selections include some of the larger fund management groups who have been active in responsible investing for a number of years. There are also funds from lesser known groups who have equally strong pedigrees and often provide more specialist exposure.”

Find out more:

RSMR Portfolio Services Limited is a limited company registered in England and Wales under Company number 7137872. Registered office at Number 20, Ryefield Business Park, Belton Road, Silsden BD20 0EE.
RSMR Portfolio Services Limited is authorised and regulated by the Financial Conduct Authority under number 788854. © RSMR 2021. RSMR is a registered Trademark.