With the rapid rise of environmental, social and governance (ESG) investing, Dynamic is making it easier for advisors to offer this style of “responsible investing” to clients, affording them the opportunity to effectuate change through their investment preferences. ESG factors cover the spectrum of issues, including how corporations respond to climate change and minimize their carbon footprint, to their health, safety and culture policies.
The Dynamic Portfolio Services team has created ESG models with allocations ranging from 0% equity to 100% equity in 10% increments, including the Dynamic ESG 60.
“It’s an all-weather portfolio that is efficient on a long-term basis for clients,” explains Dynamic Chief Operating Officer Craig Morningstar. “With Dynamic’s rules-based approach to model creation, we strive to capture opportunities and enhance the value of the portfolio while managing risk.”
Utilizing index-based ETFs, the new ESG models are focused on the environmental component of ESG and include the same capital market assumptions used in our other model overlays. Desired investment characteristics of the models include:
• ETFs classified as ESG only
• ETFs with minimum AUM of $100M
• ETFs established 3-5 years ago
• ETFs focused on market cap weighting, i.e., better ESG score results in a higher allocation
The new ESG models will be introduced on the Dynamic Resource Call, taking place on March 18, 2021.
Sustainable assets have soared from $639 billion in 1995 to $17.1 trillion today, according to US SIF Foundation data. That's a third of total U.S. AUM.
Over the past year, advisors’ interest in ESG investing for clients has substantially increased, according to Morningstar. “As with many Dynamic portfolio solutions driven by advisor request, developing an ESG solution is another example of listening to our advisor clients and delivering on their requests.”
For more information on the new Dynamic ESG models, contact the Portfolio Services team.
