UBS Global Wealth Management is to launch a 100% ESG sustainable cross-asset investing portfolio- for clients in the UK.
It will be available by the end of June 2018 and focus on engaging companies that currently fall short in their corporate governance.
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Among other asset classes in the fund, UK clients will gain access to World Bank bonds; green bonds and ESG equity funds focused on shareholder engagement, with a choice of three new portfolios: Yield, Balanced and Growth.
This comes after UBS launched the investment vehicle in Switzerland in December 2018, and Asia earlier this year.
UBS said the portfolio in Switzerland has already generated $1bn.
The Swiss private bank also plans to launch the ESG cross-asset portfolio in the US by June.
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By GlobalDataJames Purcell, head of alternative and sustainable investment at UBS global wealth management’s chief investment office, described the fund launch as “a new offering that breaks ground” in the industry because it is a 100% sustainable solution cross-asset.
Eva Lindholm, UBS’ head of global wealth management in the UK, said: “There is a much greater awareness you don’t have to sacrifice returns to invest responsibly.”
Purcell said the portfolio is not a just about excluding products or such as tobacco from the portfolio, in a process known as negative screening.
While Purcell said adopting an exclusionary approach in sustainable investing is a good way to align one’s values to a portfolio, he warned: “It is not so useful if you want to change the world around you”.
He said instead UBS is pursuing an “engagement approach” in collaboration with Hermes Investment Management Group to transform companies who need to improve their ESG practises.
Purcell said: “Our goal is to engage with those companies that actually we don’t like, rather than closing your eyes to them and actually have a dialogue with them to help them improve their practises.”
He added: “This is something that is core to this offering. Beyond the screens, it is about integration and engagement.
“Say there was a scandal at a company in 2011, we would usually exclude it. What Hermes and we have done is the opposite. This is the time where you step in and say let’s help you improve your corporate governance. “
Purcell concluded: “This offering would not have been possible 2-3 years ago. Because some of the financial market elements such as green bonds would not actually have the market depth to make this possible. In the case of Green bonds, the issuance has been doubling for the past five years and it perhaps was not even wanted ten years ago. “
