Moneyfarm’s ESG portfolios explained

Recently, we introduced our new Socially Responsible Investing portfolios. Based on the fundamental principles of ESG (environmental, social and governance), our new portfolios target returns in the same way as our regular ones always have, only with an added layer of social responsibility. 

We want our clients to feel confident when they invest, in a way that best aligns with their values. It’s quick and easy to open a Socially Responsible Investing portfolio with Moneyfarm – find out how you could grow your wealth over time, all while making a real difference. 

How we build our ESG portfolios

Building an investment portfolio with strict ESG requirements takes time. For our asset allocation team, it is an added layer of complexity to consider on top of what is already a substantial process. 

We build both our ESG and regular portfolios using only the best-in-class ETFs. For our Socially Responsible Investing product, we’re focusing on those that optimise for things like CO2 intensity, environmental risk, the avoidance of controversies and other similar metrics. 

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We also apply negative screening alongside this best-in-class approach. Simply put, this means avoiding companies operating in areas like arms or fossil fuels. Ultimately, when you invest in a Moneyfarm ESG portfolio, you can be confident that your money is being put to work in a way that aligns with your worldview. 

Performance and diversification

We often get asked how Socially Responsible Investing portfolios perform. Indeed, when people invest, they do so to protect and grow their wealth first and foremost. 

Of course, we can’t guarantee that our Socially Responsible Investing portfolios will perform as well or better than our regular ones. There is, however, a growing body of evidence to suggest that, over a long term period, ESG-focused portfolios may actually outperform their regular counterparts. 

In fact, simulated performance shows that from 2013 to 2021* investing in our most adventurous portfolio would have earned you up to 5% more than a regular non-ESG portfolio. What we mean to say is that, in 2021, investing in a Socially Responsible portfolio no longer means sacrificing returns. 

Another thing that’s important to note is that our ESG portfolios are diversified in the same way as our regular ones. By using quality ETFs, we are able to spread market risk out across geographies, industries and currencies, meaning our investors are theoretically able to absorb any losses with gains elsewhere. 

Effective diversification is something our asset allocation team will monitor regularly to ensure that both our ESG and our regular portfolios are fit for purpose. Socially Responsible Investing with Moneyfarm comes with active management, both for effective diversification and adherence to stringent ESG metrics. 

Find your ideal portfolio today

Getting set up with a Moneyfarm investment portfolio is quick and easy. You just have to answer a few questions about your financial situation and your attitude to risk, so we can match you with a portfolio that suits your long term goals. A Socially Responsible Investing portfolio is just as easy – you can find out everything you need to know here.

If you have any questions about Moneyfarm’s Socially Responsible Investing portfolios, or ESG investing more broadly, take a look at our frequently asked questions page. Or, if you want to discuss your personal financial situation and how a Moneyfarm portfolio could work for you, feel free to get in touch with a member of our investment consultancy team. They’ll talk you through your options and handle all the admin, so you can focus on what really matters. 

*Moneyfarm backtest comparing our current ESG portfolios against their non ESG equivalent simulations and not our own regular mid-range portfolio due to its composition changing over the modelling period. Performance gains across our full range of portfolio risk levels were between 0% – 5%. Capital at risk. Simulated past performance is not a reliable indicator of future performance.

†Certain information ©2021 MSCI ESG Research LLC. Reproduced by permission.
Although Moneyfarm’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information (the “Information”) from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness, of any data herein and expressly disclaim all express or implied warranties, including those of merchantability and fitness for a particular purpose.