News and Analysis | Written by Victoria Redsell, Paraplanner, 27 January 2023

New and improved climate-focused portfolio: the next step in the evolution of thematic portfolios

Path Financials’ journey began back in 2019, when founder David MacDonald had an epiphany and took the bold step into uncharted territory; setting up the UK’s first Independent Financial Advisory to tackle the climate change emergency. Almost four years on, Path has grown exponentially, with an ever-growing client bank comes greater influence, and the result? Change is happening…

Not content with breaking the financial planning mould, the team at Path have been innovating from day one, revolutionising the delivery of expert financial advice that doesn’t trade principles for performance. Their efforts have not gone unnoticed; Path Financial has been recognised in numerous industry awards such as the Green Finance Award from Better Society Awards and being a finalist in The Sky Zero Footprint Fund. In addition, Path has achieved prestigious accreditation such as B Corp and Good Egg; and where Path goes, others follow. The number of ethical solutions available is on the up, you don’t have to be watching the TV or listening to the radio for too long without coming across an advert to switch your bank or move your pension to help the planet.

In response to demand to take Positive Impact investment to the next level, and ramp up focus on direct climate change action, Path broke new ground with another UK first. In October 2021, Path launched the ‘Climate Focus and Climate Solutions’ portfolios, which were designed to allow investors to tilt their investment funds towards companies whose products and services were tackling climate change head-on. The portfolios have been very successful – out-performing their peer-group in terms of financial performance. Commercially too, they have been very successful and have proved popular with Path clients. Path has seen substantial inflows as consumers continue to exercise their choice and power, using their pensions and investments as a force for good and positive impact.

With companies, investment houses and fund managers waking up and tuning into the changing mood music, the growing number of options available enabled Path to draw on the expertise of their in-house investment committee, to curate a thematic, focused selection of funds and investment trusts to sit in the original portfolios. As more investors choose to exercise their power and opt for thematically biased portfolios, the size of the market grows with increased demand, so the number of options available increases as fund managers, investment houses and indeed companies themselves adapt to the growing needs of the planet and its people to contribute solutions rather than problems.

Sitting on the laurels is not an option at Path, who are continually evaluating their offering to ensure that Path clients are best placed to capture opportunities for both personal fund growth as well as maximising their potential Positive Impact returns, and so the Path Climate Focus and Climate Solutions portfolios are evolving. In order to deliver the optimal levels of research and dynamic management that the portfolios require, Path Financial are delighted to announce the appointment of King and Shaxson (K&S) as manager of the portfolios effective January 2023.

This appointment brings the Climate Focus and Climate Solutions portfolios into line with other Path Portfolios, with the addition of a Discretionary Management overlay and access to investment house research, positive impact reporting and dynamic portfolio development. This active fund management approach will mean that Path clients who select a climate tilted portfolios will have their funds regularly re-balanced to harness the best the market has to offer and keep your portfolio in line with your investment strategy.

Who are King and Shaxon? King and Shaxson have a long and distinguished track-record as a positive-impact only investment manager and have recently celebrated 20 years of ethical investment. K&S have been named the Best Ethical Discretionary Fund Manager, three times between 2020 and 2022 by Investment Life and Pension Moneyfacts and the team at K&S credit themselves as seeking out investments which have a positive impact on people and the planet. 

As a discretionary fund manager, K&S are continually monitoring and reviewing investment positions with a forward-looking and adaptive outlook. Their approach goes beyond just looking at ESG data; the method K&S use to screen investments includes both a process driven quantitative and values-based qualitative approach. This is because whilst quantitative ESG data is an important part of screening a company or fund, it is necessary to look beyond just data and take into account other sources of information to determine the big picture story. Costs are very similar to the existing portfolios since Path Financial’s investment management fee will drop away, replaced by their management fee for this enhanced service.

The K&S investment team, under the leadership of Wayne Bishop, shares Path’s passion and commitment to Positive Impact investment and their appointment builds strength and perfectly compliments the excellent work currently being done in our other portfolios managed by Tribe and EQ Investors.

And this is only the beginning, all of this means that there is more choice than ever and more choice means potentially more thematic biased portfolios in the future. With 17 UN Sustainable Development Goals to address, the coming years may hold the opportunity to develop portfolios focused on SDGs such as gender equality, clean water and sanitation and sustainable cities and communities. Watch this space to follow Path’s Positive Impact journey.

To find out more, please speak to your Path financial adviser or arrange a free consultation.