A responsible approach to multi-asset investment

Environmental, social and governance (ESG) risks can be important drivers of investment value. We believe investing responsibly by taking such factors into account should be a central consideration for investors – and we aim to do so in our flagship multi-asset strategy.

In practice, we seek to integrate a responsible approach across all asset classes within our strategy, including market index-based securities, pooled funds and our direct holdings, which include listed infrastructure companies. By incorporating a responsible approach into each of the asset classes in which we invest, we have the flexibility to shift allocations without compromising our responsible investment goals.

  1. We have engaged extensively to encourage the development of derivatives for ESG-screened indices, such as the S&P 500 ESG Index. Our strategy’s market-based ESG exposures typically aim to allocate capital towards constituents with better ESG ratings and limit exposures to tobacco, controversial weapons, thermal coal and companies not in compliance with the UN Global Compact.

  2. ESG considerations are a key component within the pooled funds we invest in, with Insight’s debt portfolio managers utilising our proprietary Prime corporate and sovereign ESG ratings

  3. Infrastructure holdings are a focus for analysis and engagement. In partnership with Insight’s Responsible Investment Team, we have introduced proprietary ESG scores for all infrastructure holdings, assisted by our proprietary questionnaire for companies we invest in, designed to fill in any information gaps on ESG-related issues. We then maintain regular engagement with investee management and company boards regarding governance, and broader social and environmental related issues.

 

Important Information

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material must not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or otherwise not permitted. This material should not be duplicated, amended or forwarded to a third party without consent from Insight Investment.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Past performance is not indicative of future results.

This material should be read in conjunction with the whitepaper.

The value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full amount invested. Past performance is not a guide to future performance.

Investments in bonds are affected by interest rates and inflation trends which may affect the value of the portfolio.

Where the portfolio holds over 35% of its net asset value in securities of one governmental issuer, the value of the portfolio may be profoundly affected if one or more of these issuers fails to meet its obligations or suffers a ratings downgrade. 

A credit default swap (CDS) provides a measure of protection against defaults of debt issuers but there is no assurance their use will be effective or will have the desired result.

The issuer of a debt security may not pay income or repay capital to the bondholder when due.

Derivatives may be used to generate returns as well as to reduce costs and/or the overall risk of the portfolio. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.

Investments in emerging markets can be less liquid and riskier than more developed markets and difficulties in accounting, dealing, settlement and custody may arise.

Where high yield instruments are held, their low credit rating indicates a greater risk of default, which would affect the value of the portfolio.

The investment manager may invest in instruments which can be difficult to sell when markets are stressed.

Where leverage is used as part of the management of the portfolio through the use of swaps and other derivative instruments, this can increase the overall volatility. While leverage presents opportunities for increasing total returns, it has the effect of potentially increasing losses as well. Any event that adversely affects the value of an investment would be magnified to the extent that leverage is employed by the portfolio. Any losses would therefore be greater than if leverage were not employed.

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