Envestnet Introduces Impact Quantitative Portfolios

Portfolios Significantly Expand Impact Investing Options for Wealth Advisors and Their Clients

CHICAGO—October 26, 2016— Envestnet, Inc. (NYSE: ENV) has launched a new series of the Quantitative Portfolios (QPs) managed by Envestnet's portfolio consulting group, Envestnet | PMC. The PMC Impact Quantitative Portfolios comprise a new suite of products that brings together beta exposure, tax efficiencies, and market index returns with environmental, social, and governance (ESG) investment preferences in a single, low-cost, and passively managed SMA (separately managed account) structure.

To meet the growing demand for impact investment products, Envestnet developed the new Climate Change, ESG, and Gender Lens Investing portfolios in partnership with Sustainalytics, one of the world’s leading ESG research firms, and Veris Wealth Partners, a leading impact investing wealth management firm. 

“Envestnet has been a pioneer in impact investing since 2008, and we are continuing to combine thoughtful investment intelligence with advanced technology to offer advisors a competitive edge in this area,” said Jim Lumberg, Co-Founder and Executive Vice President of Envestnet. “Our innovative impact platform is the culmination of all the progress we have made in terms of research and product innovation. These targeted portfolio solutions can empower advisors to demonstrate more value for clients who wish to align their investments with their personal interest in making a positive impact—a trend that has been increasing, particularly among Millennials and women.”  

For additional insights and resources on Envestnet | PMC’s Impact QPs, please visit: http://www.investpmc.com/impact.

The PMC Impact QPs incorporate five pillars that harness the core competencies of manager research, asset allocation, and portfolio construction available on the Envestnet platform. The pillars of PMC’s methodology include:

  • Research: PMC’s rigorous manager research, selection, and due diligence process incorporates special criteria to identify ETF, mutual fund, and SMA managers for the Approved Impact Select List of vetted and approved managers.
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  • Overlay: PMC utilizes 17 screens from Veris to customize client portfolios and target positive change, gain specific sector exposure, or minimize negative impact for client portfolios.
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  • Solutions: PMC offers proactive, diversified, and professionally managed portfolios, including multiple managed mutual fund portfolios and the new PMC QPs with ESG overlay. QPs provide low-cost, large-cap asset class exposure to securities with high Sustainalytics ratings.
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  • Reporting: Reporting capabilities, available in 2017, will include quarterly reports for portfolios in total and risk-adjusted terms, and against their benchmarks. Reports will also aim to highlight a portfolio's social impact, through stories behind particular securities, and progress against impact benchmarks.
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  • Practice Management: Commentary, research, and tools from PMC help advisors engage clients and encourage them to make more informed impact-investing decisions.
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“We believe sustainable and impact investing are the best ways to achieve strong performance while benefiting future generations,” said Patricia Farrar-Rivas, CEO of Veris Wealth Partners. “We are proud to partner with Envestnet | PMC to support more advisors and investors in incorporating reliable sustainable and impact investing products and strategies into their portfolios.”

Each Impact QP portfolio contains a subset of the companies in a major market index, and is designed to mimic the portfolio characteristics of the index as a whole. Using ESG scores from Sustainalytics, PMC optimizes each portfolio toward high-impact stocks. PMC then utilizes a proprietary risk model to develop and enhance target portfolio characteristics, and reviews the portfolio to ensure the target characteristics have been met. The Impact QP portfolios can be adjusted at the security and industry levels to accommodate each client’s unique circumstances.

“The launch of these innovative products is a milestone event for impact investing,” said Diederik Timmer, Executive Vice President of Institutional Relations at Sustainalytics. “The Envestnet | PMC Impact QPs will help advisors fully optimize ESG investment strategies while offering long-term intrinsic value to their clients.”

PMC possesses deep index-based solution expertise, advising more than $1.3 billion in custom tax transition strategies and tax-efficient solutions as of September 30, 2016. It leverages this expertise, along with ongoing strategic partnerships with ESG and impact investing industry leaders Sustainalytics and Veris Wealth Partners, to manage the Impact QPs.

Sustainalytics, an independent ESG and corporate governance research, ratings, and analysis firm, provides company-level research data for the Impact QPs. Veris Wealth Partners delivers impact research and portfolio construction support, including for PMC’s Approved Impact Select List of vetted and approved managers, and reviews portfolio algorithms and tracking error to ensure the Impact QPs adhere to ESG principles.

Like PMC’s other QP families, the Impact QPs are also managed using tax-smart techniques and capabilities to position the portfolios for potential “tax alpha” that can add up to 60 basis points of value annually (PMC Quantitative Research Group, “Capital Sigma: The Return on Advice”, May 2016). The QPs hold fewer positions to minimize turnover, and rebalance only upon corporate actions or when positions’ natural price movements violate tracking error constraints. In order to prevent overtrading, PMC weighs tax-loss harvesting opportunities—which occur when losses exceed the prescribed minimum threshold—against risk and trading costs. PMC also possesses the capability to manage portfolios according to client-specific complex tax situations.  

Envestnet's impact investing platform recently won the 2016 WealthManagement.com Industry Award in the Socially Responsible Investing (SRI)/Impact Investing category.

About Envestnet
Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to financial enterprises and advisors. Our solutions unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet enables the transformation of wealth management into a transparent, independent, objective, and fiduciary standard of care, and empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.

Envestnet’s Advisor Suite enables financial advisors to better manage client outcomes and strengthen their practices. Institutional-quality research and advanced portfolio solutions are provided through Envestnet | PMC, our Portfolio Management Consultants group. Envestnet | Yodlee is a leading data aggregation and data analytics platform powering dynamic, personalized financial apps and services for millions of consumers. Envestnet | Tamarac provides leading rebalancing, reporting, and practice management software for advisors.

More than 2,000 companies, including 15 of the 20 largest U.S. banks, 38 of the 50 largest wealth management and brokerage firms, over 500 of the largest Registered Investment Advisers, and hundreds of Internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences, and help drive better outcomes for enterprises, advisors, and their clients.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel (https://twitter.com/envintel).

About Sustainalytics
Sustainalytics is an independent ESG and corporate governance research, ratings and analytics firm supporting investors around the world with the development and implementation of responsible investment strategies. With 14 offices globally, Sustainalytics partners with institutional investors who integrate environmental, social and governance information and assessments into their investment processes. Today, the firm has more than 300 staff members, including 170 analysts with varied multidisciplinary expertise across more than 40 sectors. Through the Independent Research in Responsible Investment (IRRI) survey, investors selected Sustainalytics as the best independent corporate governance research firm for three consecutive years, 2012 through 2014, and in 2015, Sustainalytics was named among the top three firms for both ESG and Corporate Governance research. For more information, visit www.sustainalytics.com.

About Veris Wealth Partners
Veris Wealth Partners, LLC is a partner-owned, independent wealth management firm that specializes in impact and sustainable investing. Veris believes that superior investment performance and positive impact are complementary parts of a holistic investment strategy. Veris is based in San Francisco with offices in New York City, Portsmouth, and Boulder. As a consultant to Envestnet, Veris provides program design and portfolio strategies for Impact Investing Solutions. For information, call (415) 815-0580, or visit www.veriswp.com.

 

Media Contact:
Dana Taormina
JConnelly
dtaormina@jconnelly.com
(973) 850-7305

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