UBS Global Wealth Management (UBS GWM) has launched a cross-asset portfolio fully based on sustainable investing principles for clients in Asia.
The portfolio, comprising approximately 12 actively managed funds, and passive investments, is part of the discretionary mandate offering at the Swiss private bank.
The solution is part of UBS’ commitment to direct $5 billion of client assets towards impact investing within the next five years.
The diversified portfolio, built on partnerships with World Bank, Hermes, Solactive and BlackRock, among others, invests across seven product types.
The bond investments, which make up 51% of the balanced portfolio recommendation, include green bonds, corporate bonds issued by companies that manage environmental, social and corporate governance (ESG) issues as well as World Bank bonds aimed at sustainable economic development.
In equities, the portfolio invests in shares of companies managing ESG issues better than competitors, firms that are improving their ESG score, in addition to businesses that sell products and services tackling particular environmental or social challenges.
The portfolio also invests through fund managers that actively engage a company’s management to improve performance on ESG issues and opportunities.
Meanwhile, the yield portfolio allocates 57% and 38% to bonds and equities, respectively, while the growth portfolio invests 22% in fixed income and 73% in equities. There will an exposure to private markets, such as real estate and infrastructure, in the future.
Speaking at a press briefing in Singapore, UBS global wealth management’s head of impact investing, James Gifford, said: ‘Arguably the most exciting strategy is “ESG engagement equities” where the fund manager uses the power and influence and expertise to help companies improve over time by directly engaging in dialogue with them.’
‘For example, it could be a diamond mining company that has issues with HIV in its workforce. A small cap company that doesn’t understand yet what large cap companies are doing in terms of managing HIV and educating workers,’ he added.
Gifford noted that Asian investors have been supportive of sustainable and impact investing strategies as long as they deliver financial returns. As a result, the portfolio aims to perform equally or better than global equity and bond market indices.
‘Our assets linked to sustainable investing here in Asia have grown seven times. Last year alone, we had more than 80% growth in assets for sustainable investing in Asia,’ said Mario Knoepfel, Asia head sustainable and impact investing advisory for investment products and solutions at the Swiss bank.
In Asia, UBS GWM’s assets under management in sustainable investments were over $500 billion in 2016, partially going into impact investing funds.
The TPG Rise Fund garnered $125 million from UBS’ Asia clients, while over half of the investments in the bank’s $471 million Oncology Impact fund were from the region.