Diverse Investment Solutions

Triangle Diag 2016 cInvestors’ needs and opinions are not the only reasons for diversity. Investment managers’ views also vary as they have different investment goals, social, ethical and environmental strategies – and opinions.

Fund managers may also be balancing the demands of a number of different client’s within a single portfolio and have to make compromises.  They may have the challenge of having made commitments to existing (legacy) investors and wanting to adapt to a changing world.

Examples of how and why Investment Managers approaches vary:

Different funds have different investment objectives

• Asset types vary

• Geographic areas vary

• Choice of industries/companies differ as a result of themes or screens

• Aim to beat different benchmarks

• Focus on different timescales – some fund manager are more long term than others

Different funds have different SRI, green /or ethical strategies

• Some have narrowly defined themes or strict ethical screens which can narrow investment choice

• Some have SRI strategies because they believe they will bring performance benefits – others have SRI strategies that dictate where they can invest and are driven by pre-set ‘ethical’ policies rather than analysis of changing business environment

• Some have broad themes or apply best of sector approaches which widen investment choice

•’ Engagement only’ SRI strategies do not directed effect where a fund can invest

Different funds use different SRI research and focus on different areas

• Some funds carry out their own significant levels of in-house SRI research which can mean they go ‘deeper’ into some issues than other fund managers.  This can shape fund managers’ understanding of companies and issues.

• Some funds buy in research and are therefore likely to be similar to other funds that use the same research

• Some fund managers have higher levels of expertise in specific areas which can shape their views and decisions.

They have different clients who want different things.

What clients want may influence fund manager strategy if the critical mass of clients with a particular view is significant.

Fund managers work for different organisations.

Who a fund manager works for may influence where they invest particularly if there is a house view on particular issues, sectors or companies. Senior management commitment will also impact the resources available for SRI and therefore the likelihood of a ‘bespoke’ strategy.  Strategies may also be directed by a groups CSR (Corporate Responsibility) strategy.

Adviser tip:

Different funds suit different people. This diversity offers advisers the opportunity to demonstrate the value of seeking professional advice and can bring ‘holistic’ financial planning to a whole new level.

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Registered Company: SRI Consultants Ltd. Company No: 03904843