BT Panorama sees ESG managed accounts double its FUA

New insights from BT Panorama have shed light on the significant growth in funds under administration (FUA) in environmental, social and governance (ESG)-centric managed accounts on the platform.

FUA of ESG managed accounts on BT Panorama doubled in the 12 months to December last year, finishing with $129 million.

Zac Leman, Head of Managed Accounts at BT, said this was just the “tip of the iceberg” for ESG managed accounts, making up only 0.87% of the $14.8 billion in total managed accounts FUA.

“It’s important to bear in mind that this is off a low base. Last year we added six ESG-focused managed accounts to meet demand from advisers who are catering to client demand. The ESG focused products are appealing to advisers because they understand that ESG investing can be a key element of their advice practice’s growth strategy,” he said.

“We now have a total of 18 ESG managed portfolios on the platform. To date, ESG-focused managed accounts is still a small but growing area. We’re still only seeing the tip of the iceberg and expect more growth.”

BT Panorama said several of the ESG-oriented managed account products available on its platform enjoyed a stronger performance and surging interest from advisers and clients in 2023 than the previous year, which was seen in the Gild Wealth portfolios managed by Evergreen Consultants and launched last year.

Angela Ashton, Founder and Director of Evergreen Consultants, told Financial Newswire that the performance of ESG-related managed accounts is “growth biased” and so endured a “tough time” in 2022. She also highlighted several instances of greenwashing as factors in the sector’s underperformance, as investors grew concerned about the rise in misleading messaging perpetrated by managers and ESG’s “trajectory plateaued”.

However, she said despite this downturn in the short-term, clients are “committed [to the solutions] regardless of performance” and recognise their long-term viability. This contributed to its strong performance in 2023’s growth environment. Ashton said as the “makeup of the market changes, tech becomes more mature and solutions develop”, ESG factors become “more aligned with change” and accepted as a “core offering” for practices.

BlackRock, one of BT Panorama’s largest ESG managers according to the platform, also recorded a surge in interest in their ESG Model Portfolios in the last few months after FUA quadrupled in 2023.

“They say that while sustainable investment strategies tended to underperform in 2022 when compared to their traditional counterparts, they’ve seen a rebound in performance that has helped bolster the appeal of sustainable investment strategies. Australian advisers and investors recognise that ESG factors can be tied to a company’s long-term performance as they increasingly incorporate these considerations in their portfolio construction process,” Leman said.