Comparing our active and passive ethical solutions
Please note:
- The information on this page is only suitable for financial professionals.
- Past performance is no indication of future returns and investors could get back less than they pay in.
- There’s no guarantee that models or funds will meet their objectives.
- The value of investments can go down as well as up.
Our two approaches
Both our Ethical Active and Passive ESG solutions aim to deliver long-term growth while aligning with ESG principles and avoiding exposure to harmful sectors or activities.
However, they differ in the way they implement their ESG strategies, with our active solution benefiting from more rigorous screening and in-depth engagement. Passive - by its very nature - can't quite achieve the same level of screening and engagement but is more cost effective.
Here are some of the main differences between the two solutions, so you can decide which is best for you and your clients:
| | Ethical Active (A-D) | Passive ESG |
|---|---|---|
| Management Style | Invests in active funds. Active managers can be much more selective in the companies they own. | Invests predominantly in passive funds. Passive managers aim to achieve well-diversified exposure, so can be less selective in the companies they own. |
| Typical number of stocks per fund | 30-50 for equities, 100+ for bonds | 100+ for equities, 1,000+ for bonds |
| Engagement | Active managers generally conduct more in-depth engagement with the smaller number of companies they invest in, building deeper relationships with company management and engaging with most companies in their portfolio. | Passive managers typically target priority companies on specific issues like carbon emissions, rather than engaging with every company across their portfolio. |
| Data and analysis | Active managers select companies based on their in-house analysis and meetings with company management. They might also use external ESG data and ratings, but mostly rely on their own research. | Our passive ESG portfolios are constructed using a rules-based approach in line with the index being tracked, based solely on data from the ESG data and ratings providers (e.g. MSCI) |
| Fund Choice | Large universe of funds available as ethical, sustainable and ESG funds have been around since 1980s. | Small universe of funds available as the passive ESG universe is relatively new. |
| Charges | Higher, reflecting the additional manager skill involved and due diligence required. 0.46% - 1.10% (DFM + OCF) | Lower as the solution is built mostly with passive funds. 0.21% - 0.34% (DFM + OCF) |
Explore our range of ethical solutions
Both our active and passive ethical solutions that aim to cater to a broad range of planning needs and client preferences. Find out more below.
