Intelligent, diversified portfolios
Our investment philosophy is based on taking the long view and thinking
protection first – as nobody knows what’s around the corner.
However, you can choose the level of risk you’re comfortable with and we will provide you with a portfolio that meets your requirements. You get access to highly qualified asset managers that determine the best way to invest your portfolio and maximise value over time.
Market volatility is a normal occurrence, however, over the long term, the stock market has always proved to be the best way of growing your money.
Exchange traded funds (ETFs)
We use ETFs which tracks an index, a specific asset or basket of assets. ETFs cover many areas of the market including stock indices, sectors, commodities, currencies, bonds and even instruments that track the volatility of the stock market.
We use them because they are a lower cost way of investing in the stock market and we can pass that saving on to you in the form of a low fee. This in turn means, over time, you get a better return as more of your savings are re-invested.
Rebalancing is used to lower volatility and improve returns – a process that sells assets that have become expensive while buying assets that have become cheaper.
Low fee strategy
The amount you pay in fees affects your portfolio’s performance. And low fees play a pivotal role in our investment strategy – as we know that, over time, this is probably one of the most important factors in generating better returns.
Our ESG portfolios
Most people will be familiar with the term ESG investing by now, given it has gained a lot of publicity in the last few years. ESG stands for Environmental, Social and (Corporate) Governance and looks at the impact your investments have and whether or not your portfolio is in line with your ethos. Many platforms provide scores for stocks that indicate the ESG credentials of a company and allow investors to build portfolios based on these factors.
In this article, we will explain a bit more about how ESG scores are calculated, what the benefits are and how we use ESG portfolios.
How is an ESG score calculated?
Typically, 4 data sets make up the overall score, the three in the name, plus a controversies score.
The overall score for the stocks’ environmental rating will be based on three environmental areas: resource use, emissions and innovation. The number of indicators available for each of these three areas defines the area’s weighting in making up the overall environmental score.
For the overall score for Social, four areas are looked at: workforce, human rights, community and product responsibility.
The overall score for governance is calculated based on the scores for management, shareholders and CSR strategy.
The last area that looked at is controversies. Controversies across all the ten areas are aggregated into one category score.
Overall scores from the above data make up an ESG score out of 10 that can be used to build portfolios in line with an individual’s principles. As ESG investing becomes more popular and an increasing number of people build portfolios with these scores in mind, companies will need to improve their scores if they want their stock to remain desirable to investors.
What are the benefits of ESG investing?
Aside from the personal reasons people may have for investing in portfolios with high ESG scores, there are several compelling reasons why these types of portfolios are suitable for investors.
- ESG stocks can reduce portfolio risk
Companies that have high ESG credentials are less likely to have significant disruptions in the form of lawsuits, negative PR, employment issues or any number of other situations that will impact operations and profitability. If a company actively addresses ESG risks, it should see fewer business disruptions and produce more reliable financial results over time. That means lower downside risk for shareholders.
- Higher returns through a high ESG focus and reduced volatility
Research has shown that ESG stocks generate comparable or better financial results compared with non-ESG focused counterparts. We have seen a large amount of volatility in the markets due to geopolitical reasons and black swan events such as the coronavirus pandemic. ESG stocks have demonstrated lower volatility, and companies with high non-financial indicators of quality seem to perform significantly better on the market and accounting-based metrics.
How do we use it?
Brite Advisors has created ESG focused portfolios for our clients who want to benefit from the potential financial benefits these stocks can offer and those who want their investments to align with their morals and values.
Please download our strategy sheets providing net performance, benchmarks and holdings in asset classes.
These strategy sheets are updated every three months.
Please contact us for further information if required.
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