Last year I was helping a friend to construct a diversified multi-asset portfolio. She wanted a low volatility, low cost, diversified asset mix and decided on a blend of Vanguard Lifestrategy (20 & 40) as a core of the portfolio with a smaller allocation between Personal Assets Trust, HSBC Global Strategy Cautious and Royal London Sustainable Managed Growth.
I have followed the fortunes of this portfolio. I already hold the Lifestrategy funds - 40 & 60, however I have been impressed with the RL fund in particular and decided to add it to my own portfolio earlier this month. The decision was prompted by the Coventry BS cutting my savings rate this month...just two months after they increased it.
This is another 'Steady Eddie' fund which is listed in the IA Mixed Investments 0 - 35% Equity category. The breakdown of asset mix is :
Fixed Investments 71%
UK Equities 12%
US Equities 5%
Euro Equities 4%
Cash & Other 8%
Top 10 holdings include Amazon, Microsoft and Alphabet (Google) which have probably helped to boost returns over the past few years.
The fund has delivered a return of 8.3% in 2017 and 35% over the past 5 years which works out at an annualised average of 6.4% p.a. The fund is ranked top out of 39 funds in the sector over this period. By comparison, the Vanguard Lifestrategy 20 fund has returned 25% over the past 5 years and is ranked 10th/39.
|5 Yr Comparison v VLS20|
(click to enlarge)
The fund has paid out 3.6p in dividends over the past year which at the current price translates to a yield of 2.6% paid quarterly and has ongoing charges of 0.69%.
This fund is part of a range of ethical options which were previously managed by the Co-operative Asset Management Group and which were taken over by RL in 2013.
The sustainable range of funds may be attractive to the more ethical-minded investor as the investment process involves screening for environmental, social and governance issues.
The funds will try to avoid holdings involved in animal testing, arms trade, pornography, tobacco and nuclear power for example and there will be many investors who share these ethical considerations and who do not want to be a part of exploitative industries.
All funds in the range have a good track record for investor returns. For example in 2017, returns were :
RL Sustainable World 18.0% (40 - 85% shares sector)
RL Sustainable Diversified 12.9% (20 - 60% shares sector)
RL Sustainable Managed Growth 8.3% (0 - 35% shares sector)
So, I can get a reasonable return and invest with a clear conscience with these funds.
If you have views or dilemas about ethical investing feel free to share them and leave a comment below.
Finally, this article is a record of my personal investment thoughts/decisions and is not a recommendation - as always, please DYOR.