AJ Bell will use socially responsible investing (SRI) ETFs as the basis for its new responsible Managed Portfolio Service (MPS).
The responsible MPS aims to offer clients the chance to invest in long-term strategies which avoid companies involved in controversial sectors and those with low ESG rankings.
The new service has the same structure as AJ Bell’s equivalent passive, active and ‘pactive’ offerings, with six broadly diversified portfolios offering different levels of risk exposure.
Kevin Doran, chief investment officer at AJ Bell, said: “The demand for portfolios with a responsible investment approach has never been higher. Advisers have told us this is important to them and a growing number of their clients so, in line with our commitment to offering advisers choice, we have expanded our MPS to include a responsible investment option.
“The portfolios mirror our existing MPS service which is being used by an ever-expanding number of advisers and are also aligned with the existing risk profiling tools advisers use, so will be easy to integrate into their existing business processes.”
In addition to AJ Bell Investcentre’s 0.20% annual platform charge and the 0.25% retirement investment charge, the responsible MPS fees correspond to the level of risk investors opt for – with a range of 0.42% for cautious to 0.50% for global growth.
Doran continued: “All the portfolios have OCFs of under 0.5% per annum, so we believe this is giving advisers a highly competitive solution for clients that want to invest responsibly without sacrificing the potential for positive returns.”
The bulk of each of the new portfolios are made up of ETFs, with the firm stating that the six-strong model portfolio range invests primarily in ETFs tracking a MSCI SRI index.
Additionally, each portfolio has a 25% allocation in the VT AJ Bell Responsible Growth fund, which that company says allows it to make tactical allocation changes without incurring Capital Gains Tax liabilities upon the investor. It also gives investors the opportunity to get exposure to specialist ESG areas which would be too small to be held as a direct investment within an MPS.
Overall, AJ Bell said that investing in its balanced risk portfolio in the responsible MPS is 77% less carbon-intensive than an equivalent investment in its passive MPS.