Sustainable investing through Managed Accounts


Australian investors are transitioning into an exciting phase where two significant investment management trends are coming together – the rise of managed accounts and the surge in sustainable investing. As investors demand more transparency and more authentic responsible investment practices, it seems they’re a match made in heaven.

Managed Accounts provide professional portfolio management with better transparency than managed funds typically offer. This allows investors to have clear visibility of what they own within their portfolio, including sustainable investments.

Managed accounts – a quick overview

A managed account enables investors to delegate the day-to-day investment decisions and implementation of their chosen investment strategy to professional investment managers.

Typically, advisers have recommended managed accounts to clients for their transparency, tax efficiency and portability. The transparency gives clients clear visibility of what they own within their portfolio and advisers can use this information to improve their engagement and educational support.
There are several other benefits to using managed accounts.

  • Managed accounts help advisers fulfil compliance and governance obligations and deliver practice efficiencies.
  • Implementing advice through a managed account often yields significant time savings around client reporting and communication.
  • By moving the construction and monitoring of investment portfolios from a manual process, individualised for each investor, to an aggregated structure in which all clients are treated the same, an adviser can deliver more consistent portfolio outcomes for clients.

Take the next steps

  • BT Investment Solutions (BTIS)
    BTIS delivers an institutional grade investment management capability across a range of solutions, from low-cost index portfolios to actively managed strategies.

Why are managed accounts and sustainable investments so well aligned?

More than two-thirds of Australians have now heard of responsible investing, according to new research from the Responsible Investment Association Australasia (RIAA) . Negative experiences, such as the COVID-19 pandemic, the destruction of Indigenous cultural heritage and extreme weather events have all fuelled this awareness.

In addition, 61% of Australians1 claim they would be motivated to try to save and invest more money if they knew their savings and investments made a positive difference in the world. Sustainable managed accounts provide an ideal solution, with benefits for both clients and advisers.

Flexible investment structure

The rise in the popularity of managed accounts has coincided with increased interest in sustainable investing. This has led investment managers to be more responsive to client demands and use a variety of methods to incorporate Environmental, Social and/or Governance (ESG) factors into the investment process. BT’s Head of Managed Accounts, Zac Leman has observed “a significant increase in the number of investment managers who are either changing their current strategies to be more sustainable or more ESG aware, or more likely, they're developing new sustainable strategies in direct response to demand from advisers and clients".

With both single sector and diversified investment options available through managed accounts, investors can access specialist investment managers across a range of different portfolios. This flexibility allows investors to choose an investment that best aligns with what investing sustainably means to them. For example, they may want to exclude certain stocks or industries from their entire portfolio, or they may prefer a thematic approach.

Absolute transparency

A well-documented drawback of managed funds is that information about underlying investments sits with the investment manager and not the investor. However, we’re now in a digital world where the quality and immediacy of information are critical. It’s a key competitive advantage for investment managers, platforms and advisers who can satisfy their clients’ desire for knowledge and information about how their money is invested.

Managed accounts offer advisers just that. Leman adds, "the reason why managed accounts are resonating with investors is that if they have an interest in sustainable options, they can easily see what they hold at any point in time".

Understanding and mitigating risk

An adviser must always determine the needs and objectives of each client and find the appropriate investments to meet their circumstances. But once invested into a managed account, ongoing portfolio management (including asset selection and allocation), corporate actions and rebalancing are generally done by the investment manager without the need for ongoing advice or consent. This is a welcome risk management tool for advisers, relieving a significant compliance and governance burden.

Investors, on the other hand, crave information about how the companies they invest in are positioned for long-term success. They want to know how a company operates and how it manages its ESG risks. For the managed accounts available on BT’s platforms, all this information is easily accessible using sustainability scores, which can help to compare a company’s exposure to unmanaged ESG risk. The scores are provided by third-party research houses and are available for ASX200 listed companies and a large number of managed funds.

Sustainable Managed Accounts on BT Panorama

BT is continually reviewing sustainable managed accounts to add to its platforms.
The below options are currently available on BT Panorama.

Single Sector investments
Pendal Sustainable Future Australian Shares Portfolio
Australian Shares Large Cap
Investing in this fund provides exposure to companies that demonstrate and or/offer leading environmental and social practices, products and services. It screens out industries with direct business involvement in fossil fuels, uranium, logging, gambling, pornography, weapons, alcohol, tobacco, animal cruelty, predatory lending practices and breaches/misconduct, or companies with significant human rights, corporate governance or environmental breaches.

Pendal’s sustainable assessment process also considers how a company demonstrates strategic recognition, board oversight, and implements policies and systems to manage ESG issues.
Dalton Nicol Reid Australian Equities Socially Responsible Portfolio
Australian Shares Large Cap
DNR Capital focuses on investing in quality companies – those with earnings strength, superior industry position, a sound balance sheet, strong management and a low ESG risk.

The fund uses a negative portfolio screen across pornography, gaming, armaments and tobacco, and a positive ESG screen to identify companies with enhanced ESG policies, appealing to investors who want to make a positive difference by investing in a socially responsible way.
Diversified investments
Lonsec Sustainable Managed Balanced Growth Portfolio

Lonsec Sustainable Managed Growth Portfolio

Lonsec Sustainable Managed High Growth Portfolio
The Lonsec Sustainable Managed Portfolios provide investors with capital growth and income through exposure to strategies that demonstrate strong ESG practices and where possible, make a positive impact on the world by contributing to the UN’s Sustainable Development Goals agenda.

The portfolios minimise exposure to sectors and industries considered harmful to society or the environment, including tobacco, alcohol, gambling, weapons, adult entertainment, uranium and coal mining. They also actively seek out investment opportunities that have a positive impact on society and the environment through impact investing.

A bright future ahead

It’s clear that investors are demanding more transparency and more authentic responsible investment practices. Four out of five Australians want their super fund or investment provider to communicate more about the impact their investment is having on the planet . Through sustainable managed accounts, investors have access to more information about how their money is invested.

With sustainable investment continuing to mature, investment managers are improving their disclosure on their environmental and social considerations, as well as the influence their investment strategy is having on these factors. And, with more managed accounts being launched every month, the value of a robust and informed discussion between an adviser and their clients will only become more important.

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Information current as at 16/06/2022. This information was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (‘Westpac’). This information does not take into account any personal objectives, financial situation or need and so you should consider its appropriateness, having regard to these factors, before acting on it. This information provided is factual only and does not constitute financial product advice. Before acting on it you should seek independent advice about its appropriate to your and your clients’ objectives, financial situation and needs. Apart from any interest investors may have in Westpac term deposits, Westpac securities, the BT CMA or the BT CMA Saver acquired through the Panorama operating system, an investment acquired using the Panorama operating system is not an investment in, deposit with or any other liability of Westpac or any other company in the Westpac Group. These investments are subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of any investments acquired through the Panorama operating system. This communication has been prepared for use by advisers only. It must not be made available to any client and any information in it must not be communicated to any client. This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relief upon as such.

1 Responsible Investment Association Australia, From Values to Riches 2022: Charting consumer demand for responsible investing in Australia

2. From Values to Riches 2022: Charting consumer demand for responsible investing in Australia