Invest In Your Future
Adding ESG evaluation in the construction of target portfolios not only
gives employees the ability to align their retirement assets with their values, but also gives their portfolios an information advantage over portfolios that don't consider ESG factors.(1)
Impact RetirementTM ESG focused target portfolios are a composite of ESG focused mutual funds. The allocation to each respective fund in the portfolio is based upon an age appropriate or target risk level. Target-date portfolios change over time, getting more conservative as the vintage ages. This automatic de-risking of the portfolio over time is referred to as the “glide path.” Target-risk portfolios attempt to maintain a static risk level.
Many retirement plan record keepers have technology that allows for the creation of custom target portfolios. Adding Impact Retirement ESG focused portfolios to a plan on one of these platforms can be as easy as adding a few new funds to a plan's investment menu.
Sample portfolio allocation for illustrative purposes and does not reflect an actual portfolio allocation.
Fund Evaluation: traditional and ESG factors
Managers are evaluated on a quarterly basis for ESG, performance, risk and management factors. Funds that fail to meet the evaluation criterial documented in the Investment Policy Statement (IPS) will either be placed on "watch" or replaced depending on the deficiencies of the particular fund.
Traditional Factors Considered
Manager style and market cap consistency
Performance over short, mid and longer term
Risk and risk adjusted performance
Overall management firm strength
ESG Factors Considered
Sustainalytics Score & Morningstar Sustainability Rating
Objectionable lines of business
Controversial business practices
Documented commitment to ESG investment principles
Involvement with UN Principles for Responsible Investing or similar organization
Voting of proxies in line with ESG values
Deutsche Asset & Wealth Management, "ESG & Corporate Financial Performance: Mapping the global landscape", Dec 2015