Over the long-term, we believe that sustainable business practices should correlate with better company economic performance. However, we remain cautious in the context of significant growth in ESG mandated funds and advise clients to carefully consider the screening and methodology being used.
Our ESG portfolios employ Cantab’s overarching investment principles, with a bias towards active management and achieving diversification through geography and asset class. In this space, we believe actively managed funds are better able to align their portfolios with investor’s interests than passive alternatives. Fund managers can oversee clearly defined mandates, exercising oversight on focused portfolios of companies that are continually reviewed to ensure they are in line with the ESG mandate of the fund. As with all our portfolios, diversification is essential to risk management. Each ESG portfolio is constructed in line with clients’ risk tolerances, whereby asset allocation underpins the portfolio’s risk rating. As well as asset class and geographic diversification, we select a blend of investment strategies in order to minimise correlation within portfolios.