Ultra-high net worth investors find sustainable investment opportunities lacking

Wealth


But many of the available investment products marketed as being socially responsible or sustainable simply leave out financially risky companies or firms deemed to be in the business of “vices” — a method that doesn’t resonate with all investors, said Simon Smiles, chief investment officer for ultra-high net worth at UBS Wealth Management.

“It may turn out that you don’t want to invest in tobacco, firearms and alcohol, and so you don’t do that. But to assume that everyone has that same value is inherently problematic,” Smiles told CNBC in March.

“Some people like drinking alcohol, some people like smoking, some people like guns, so to tell investors they shouldn’t be doing it because it’s wrong, you’re straightaway not aligning with their values. (But) that’s the way a vast majority of sustainable investing products have been positioned,” he explained.

Instead of avoiding “bad” companies and investing only in firms with good credit ratings, super wealthy individuals want their portfolios to reflect what they believe in, said Smiles.

That means building a whole portfolio with investments that best represent their views on the world, he added. For example, investors who want a part in driving global development could choose bonds issued by institutions such as the World Bank and the Asian Development Bank, and those passionate about green efforts could invest in debt instruments that use proceeds to finance activities benefiting the environment.



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