TAM ESG Portfolios

Ethical investing considers its impact on the wider world. It integrates a range of factors into its decision-making processes to ensure that no investment supports potentially damaging industries.

Ethical investing pays attention to a range of issues such as climate change, water management, workplace management, ethical innovation, employee diversity, human rights and labour policies and practice. Ethical investing is not philanthropy, while it’s concerned with protecting society and the environment from further harm, its simultaneous goal is to build wealth.

Our planet is experiencing worrying environmental and social pressures. Many argue that the future of humankind hangs in precarious balance. Our next steps and decisions will determine which way the scales tilt and that is pushing many people to think very carefully about their choices, including how they invest. A focus on ethical funds means we can contribute positively to our world – while also benefiting financially.

James Penny CIO (Chief Investment Officer) at TAM explains in his ESG webinar presentation the compelling rationale behind ESG investing and why investors need to take note.

Keep up to date with our ESG blog posts

Everyone's definition of 'ethical' is different and as such, so is everyone's idea of ethical / esg investment. The same applies to fund managers that market their funds as ethical - not all will share the same views or adopt the same strategy for selecting stocks for their funds. Ethical / esg investing has dramatically evolved over the years and today there is a wide variety of ethical investment styles available.

The most traditional form of ethical investing, negative screening excludes specific companies or industries from the investment universe that do not adhere to a fund’s pre-determined ethical criteria. These companies will typically produce products or services, or have business practices, that do not align with investors’ moral principles.

Common exclusions include companies involved in the production or distribution of alcohol, tobacco, armaments and pornography.

TAM include funds in their portfolios that embrace negative screening.

Ethical investing can be approached from an alternative angle through positive screening, which concentrates on inclusion rather than exclusion. The aim is to identify companies that are making a positive contribution to society and/or the environment through the products or services they provide. Positive screening criteria may include companies that are involved in creating renewable energy, tackling poverty and promoting ethical employment practices.

TAM include funds in their portfolios that embrace positive screening.

Engagement is often carried out in conjunction with the other approaches to ethical investing. Its focus is on talking to company management about ways in which they can improve their practices and standards. Targets are often set and funds will generally disinvest in a company if it fails to meet those targets for improvement.

Impact investing aims to support companies producing tangible benefits to society and/or the environment, alongside financial returns. The key factor that differentiates impact investing from positive screening is the emphasis on measurement and intentionality. Companies must be able to quantify the impact they are generating, which should be intentional as opposed to being simply a by-product of a process already in place. The benefit of this is to encourage accountability and transparency.

The broadest of definitions. Environmental, Social and Governance (ESG) considerations are being integrated into the investment processes of a growing number of funds, including mainstream funds which do not have an explicit ethical focus.

Funds are recognising the benefits of considering ESG factors from a risk mitigation perspective. They recognize that firms which do not take these considerations seriously are at risk of suffering tangible losses as a result of poor practices, which ultimately impacts share price.

TAM's investment managers follow a rigorous process when selecting funds for the TAM ESG portfolios, conducting extensive research into the universe of ethical investments. This includes one-on-one meetings with fund managers followed by detailed desk-based analysis looking further into the fund’s investment process, portfolio positioning and performance.

The team will only select a fund that has proven to deliver on its ethical mandate, adhering to their stringent and comprehensive investment process which screens stocks to ensure only companies with ethical business or activities are included.

There is a blend of ethical investment styles incorporated into the TAM ESG portfolios.

TAM want to take full advantage of the developments that have taken place in the ethical market in order to deliver a broader and more diverse ethical investment strategy. TAM's aim is to appeal to a wide range of socially responsible investors and provide portfolios that best suit their ethical, as well as financial requirements.

Clients can select an investment portfolio that most closely reflects their investment return objectives and attitude to risk. TAM offer five risk graded portfolios that span the risk spectrum from more defensive, lower risk returns, through to higher risk, equity based investment returns.

Additionally the Liquidity Plus portfolio provides investors with an ideal vehicle to capture the best bank interest rates when markets are perceived to be too risky.

TAM use diversification across asset class, geographical focus, and underlying funds to spread risk and exposure. The table below shows a typical snapshot of the asset allocation and fund selections a TAM ESG Balanced portfolio may invest in.

TAM is a proud member of the United Kingdom Sustainable Investment and Finance Association (UKSIF), who inform, influence and connect UK finance, policymakers and the public achieve a vision of a fair, inclusive and sustainable financial system that works for the benefit of society and the environment.

TAM is regularly involved in UKSIF's annual Good Money Week campaign, bringing together financial advisers, charities, faith communities, student groups and financial institutions to help grow and raise awareness of the benefits of ethical investment and finance.

The campaign seeks to let everyone know, regardless of background or income, that they have sustainable and ethical options when it comes to their finances, so that we can all have a positive impact on the environment and society without sacrificing our wealth.

Review the detail and clarity provided in a TAM portfolio valuation.

Learn more about ESG investing here.