This is just a brief note to update you on some exciting developments from our investment partners EBI. A further, more detailed e-mail will follow next week but don’t worry, it’s all positive news.
You may recall that I wrote to you a few weeks ago discussing the availability of the EBI Earth Portfolios, this is a separate suite of investments running alongside the standard Portfolios; the main difference being that the Earth Portfolios are constructed using ESG screening.
As a reminder, ESG stands for Environmental, Social and Governance. What does that mean? Well, you could say ESG is the food equivalent of ‘free range’ or ‘organic’ options – it is the same food but farmed in a more sustainable way. Where applied to your investments – it is the same investment portfolio but created with an awareness of how the companies included manage their impact on the environment. Examples of the areas ESG is looking to improve in include the following:
Environmental – Air & Water pollution, Biodiversity & Deforestation, Emissions, Energy Efficiency
Social – Gender & Diversity, Human Rights, Labour Standards
Governance – Executive Compensation, Bribery & Corruption, Board Composition
The key change is that, following extensive research, EBI have decided to apply ESG screening to ALL of their Portfolios, essentially rendering the non-Earth Portfolios surplus to requirements. Accordingly, we will shortly be asking for your permission to transition across to the new Portfolios. There will be no charge for these changes and as an enthusiastic supporter of the EBI process, I will be switching my own family’s investments, at the earliest opportunity.
These changes will not be happening until the beginning of April but I will be writing with some more information next week.
EBI have produced a wealth of material supporting their recommendations and this can be made available to you, on request.
The EBI Vantage Service
In addition to these portfolio changes, I believe now is a good time to move our clients from EBI’s ‘Vital’ service to their ‘Vantage’ service.
The main benefit to users of the Vantage service is the availability of ‘discounted share classes’, more formally known as ‘institutional share classes’. EBI have negotiated for the benefit of investors, discounts worth an aggregated 0.11% on equity assets and 0.06% on fixed interest assets. This reduces the cost of the underling portfolio for you.
The Vantage service also provides automatic rebalancing and all future fund switches will be handled by EBI. They aim to minimise the frequency of rebalancing and the amount of trades; therefore, reducing the cost of rebalancing overall. EBI have recently analysed data to show that the rebalancing solution, along with the discounts they have obtained from fund managers has more than covered the management fee since inception for most portfolios. Their most recent study illustrates how the returns of Vantage portfolios, when compared to the same portfolio rebalanced annually, not only covered the 0.12% management fee, but also on average, added a premium to the returns (in all portfolios excluding the bond portfolio).
Lastly the Vantage services has the added benefit of reducing the amount of paperwork you need to sign.
Keep an eye on your Inbox next week for more information.
As always, if you have any questions about the above or any other finance related matter, please do not hesitate to get in touch.
Yours sincerely
Graham Ponting CFP Chartered MCSI
Managing Partner
