On the go: Following demand from members, LifeSight, Willis Towers Watson’s defined contribution master trust, will allocate around half of the equity investments within its default fund into environmental, social and governance investment strategies by Q4 2018.
According to Willis Towers Watson, this is the first master trust of its kind to make ESG a major part of the default fund. The ESG allocation will be split between two strategies. The MSCI Adaptive Capped ESG Universal Index invests in both developed and emerging markets, with a highly diversified portfolio that spreads capital and risk more evenly between stocks compared with a traditional index strategy.
It also invests more in companies with strong and improving ESG attributes. Willis Towers Watson has worked with MSCI to develop this index.
At one annual members’ meeting held by a large pension scheme I attended recently, nearly all of the questions from members concerned this topic
Ian Pittaway, Sackers
The Robeco Global Sustainable Multi-Factor Equities Index is an active strategy that invests in equities in a systematic manner, allocating to individual stocks based on a number of factor attributes such as valuation, quality, momentum and low volatility. It considers the ESG attributes of each stock and the overall portfolio as key parts of the investment process. David Bird, head of proposition development for LifeSight, said: “The DC investment world faces a range of challenges. Adding ESG’s risk profile to our investment mix supports the growing member and employer appetite for sustainable investment, while maintaining the returns they need for retirement.” “ESG factors have increasingly been on the investment agenda for DC trustees, so they need to be thinking about where it fits into their scheme’s glidepath, assessing member demand and developing the right strategies to deliver for them,” he added.
ESG is clearly a hot topic as Ian Pittaway, a partner at law firm Sackers, emphasises: “At one annual members’ meeting held by a large pension scheme I attended recently, nearly all of the questions from members concerned this topic. Trustees of occupational schemes are actively reviewing their policies in this area – partly driven by regulatory or legislative intervention and partly by member interest.”
