StashAway's Responsible Investing with ESG: Your Opportunity to Invest Consciously

25 August 2023

Investments are no longer solely about monetary gains. The 21st-century investor seeks more – a sustainable future, ethical business practices, and responsible corporate behaviour. This shift has given birth to ESG investing, a methodology that factors environmental, social, and governance issues alongside financial metrics. It’s about measuring the sustainability and societal impact of an investment, ensuring the long-term value it creates extends beyond just your portfolio, touching the wider world.

What is ESG Investing?

ESG investing, also known as sustainable investing, stands for environmental, social, and governance investing. This strategy spotlights companies with an active stance on environmental conservation, strong governance policies, and proven social responsibility in their operations. These are firms that don't just exist for profit but purposefully engage with their employees, customers, and communities, making a palpable positive impact.

The premise of ESG investing is the conviction that companies with a solid ESG foundation aren't just ethically sound and sustainable but also potentially more lucrative as long-term investments. There's a growing belief that businesses adept at managing ESG risks are more equipped to navigate long-term hurdles, positioning them for superior financial performance over time. Consequently, ESG investing aligns not only with your ethical values and societal beliefs, but also with your financial ambitions for sustained returns.

StashAway’s ESG Portfolio: An Ethical Approach to Wealth Building

StashAway's ESG portfolio is a special investment product offered by the platform that focuses on ESG factors when making investment decisions. It's designed for investors who want to align their investment strategy with their personal values and beliefs around sustainability, ethical governance, and social responsibility.

Renowned for its robo-advisor technology and intuitive investment solutions, StashAway has embraced this conscientious investing style with its dedicated ESG portfolio. In this way, StashAway's ESG investing options allow investors to effect positive change in the world while also aiming for financial returns. It is designed to allow investors to make a significant social impact with their investments while not compromising on their financial goals.

Features of StashAway's ESG-Optimised Responsible Investing Portfolio 

StashAway's responsible investing ESG portfolio features:

  1. Optimised returns: The portfolio is designed to keep your risk constant while optimising for returns. It aims for long-term outperformance with occasional deviations from market trends to maintain your designated risk level.
  2. Number of underlying funds: The portfolio consists of 7 to 13 underlying funds. This offers a diversified investment strategy that builds resilience against market fluctuations.
  3. Average expense ratio: This portfolio boasts a low average expense ratio of just 0.2% per annum. This makes it a cost-effective option for those looking to invest responsibly and ethically.

Understanding Ratings: Evaluating ESG Opportunities and Risks

To construct this portfolio, StashAway uses exchange traded funds (ETFs) that have high ESG ratings from reputable independent agencies like MSCI ESG Rating and the Morningstar Sustainability Rating. They are assessments developed by independent entities to evaluate companies based on their environmental, social, and governance practices. 

These ratings consider a wide range of ESG indicators, including how companies manage resources, their labour standards, their policies on bribery and corruption, their board structure, and many others. They provide investors with a comprehensive understanding of how well companies manage ESG risks and opportunities.

The MSCI ESG Rating

The MSCI ESG Rating is designed by MSCI Inc., a leading provider of critical decision support tools and services for the global investment community. The ESG Ratings measure a company's resilience to long-term, industry-specific ESG risks. They incorporate seven rating categories and 35 ESG Key Issues, such as product carbon footprint and labour management, and are designed to support common approaches to ESG investing. The ratings range from leader (AAA, AA) to laggard (B, CCC). They allow investors to understand, compare, and manage ESG risks and opportunities within their portfolios.

Morningstar Sustainability Rating

Morningstar, an investment research firm, provides this rating, which is a measure of how well the companies held in a portfolio are managing their ESG risks and opportunities relative to their industry peers. The Morningstar Sustainability Rating is a holdings-based calculation that uses company-level ESG analytics from Sustainalytics, a leading provider of ESG research. The ratings are conveyed through a system of five globes, where one globe represents the lowest score, and five globes signify the highest.

StashAway's ESG Portfolio Strategy: Making a Difference

Armed with these ratings, StashAway’s ESG portfolio curates a collection of high-quality ETFs. This strategic approach allows StashAway to build a diversified portfolio that seeks returns while minimising risk. The ESG portfolio, like all StashAway offerings, hinges on risk diversification, informed asset allocation, and market responsiveness. Yet, it adds another layer – ensuring the companies within the portfolio are committed to making a positive impact.

StashAway’s Responsible Investing portfolios have strong ESG scores, as determined by an average of the two scoring models. The portfolios' ESG scores are impressively high, ranging from 3.82 to 4.13 on a scale of 5, indicating a firm commitment to responsible investment practices.

Consider Investing Consciously with StashAway's ESG Portfolio

StashAway’s ESG portfolio offers a unique opportunity to engage with the rapidly growing field of ESG investing. It invites you to make an investment that resonates with your ethical values while still seeking returns. It's about aligning your financial journey with your principles and investing in a more sustainable, equitable world while building wealth. With StashAway's ESG portfolio, you have the power to ensure your investments count not just in dollars but in making a difference too. Explore our range of other investment products.

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