Wednesday, 2 November 2016

Pennine Positive Portfolio becomes First Managed Fund Portfolio Service to Measure Impact

'Impact' is becoming a much used (and abused) term in the field of investing for positive outcomes. The clearest example of this is the BSF Impact World Equity Fund that lists mining, oil and tobacco companies among its many holdings. Everything has an impact but surely this one isn't positive! 

Other funds and managed portfolio services claim to invest positively, but how true is this in reality?  With the notable exceptions of Wheb, Threadneedle and Impax, listed funds have a woeful record of systematic reporting on their social and environmental impacts, tending to cite examples of holdings with a positive impact. This can be highly misleading, as the overall impact can be rather less compelling.  The financial industry is very good at reporting on geographic diversification, asset allocation and financial factors, so if funds are serious about positive impact, why don't they apply a similarly analytical approach to impact?

It gets a bit more complicated for managed portfolios of funds, because it requires analysis of each underlying fund.  3D Investing has undertaken what we believe is the first systematic analysis of impact of a portfolio of funds, in order to demonstrate the extent of any positive impact. We've done this by classifying each underlying holding in every fund held within the portfolio. This has allowed us to determine what percentage of the portfolio is held in positive impact areas including renewable energy, healthcare, low carbon transport and social infrastructure.

The Positive Pennine Portfolio 4 invests almost half in positive solutions


This demonstrates the difference to a conventional portfolio.  The Positive Pennine Portfolio is shown to invest 46% in solutions to social and environmental challenges whilst the FTSE100 invests 14% and also holds 27% of the portfolio in unsustainable companies, whilst the Positive Pennine Portfolio holds none.

The FTSE100 invests just 14% in positive solutions and 27% in unsustainable companies

The report seeks to present a balanced picture that doesn't just focus on the positive impacts but highlights any potential negative issues.


This makes for transparent reporting that properly demonstrates the true social and environmental impacts of a portfolio. We are delighted to be able to partner with Pennine Wealth Management in producing impact reports and hope to develop this further in the future.  The full report can be downloaded from Pennine's web site.

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