Elston launches multi-asset income ETF portfolio aimed at charities

Jul 5th, 2016 | By | Category: Alternatives / Multi-Asset

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London-based investment research and advisory boutique Elston Consulting has launched a Charity Multi-Asset Income ETF Portfolio intended to provide charitable sector clients with a regular income and above-inflation returns at low cost.

Elston Consulting celebrate first anniversary of ETF-based smart beta index launches

Henry Cobbe, Head of Research, Elston Consulting.

The ETF managed portfolio, which is diversified across a broad range of asset classes, has been designed to target a total return of 4% above inflation over the long-term, with an income yield of around 3.6%.

It is designed for financial advisers to help smaller charities establish cost-efficient investment portfolios using a diversified portfolio of ETFs.

The portfolio uses 12 iShares ETFs, which together represent 5,654 underlying securities.

Equities account for 65% of the portfolio, while 21% is allocated to sovereign and corporate bonds, and the remaining 14% is in alternatives, which includes gold, commodities and global property. The weighted average total expense ratio (TER) of the portfolio is 0.42% based on current weightings.

According to a note from Elston, there is an estimated 20% reduction in expected volatility relative to global equities owing to the diversification effect.

The portfolio will re-balance quarterly to strategic weightings, but has no tactical overlay. The construction process uses Elston’s proprietary quantitative models for the screening, selection and optimisation of portfolios of ETFs. This includes a factor bias to tilt exposure in favour of high-income and small-cap firms, relative to global equities.

Henry Cobbe, Head of Research at Elston Consulting, said in a statement: “Wealth managers and financial advisers are increasingly thinking of how to help clients achieve their goals. With the Elston Charity Multi-Asset Income portfolio, advisers working with charities can offer a systematically constructed broadly diversified investment strategy that aims to provide a regular income and above-inflation returns at very low cost.”

Joe Parkin, Head of iShares UK Wealth & Retail Sales at BlackRock, added: “There is a clear trend towards investors of all types using ETFs to manage their portfolios. Investors can choose from a diverse range of exposures, spanning global geographies and asset classes, to express their unique views while keeping investment costs down. ETFs will continue to challenge the status quo when it comes to investing well into the future.”

The portfolio will be benchmarked against the Steady Growth Index, offered by ARC Charity Indices. The Steady Growth Index is one of a set of four sterling-denominated indices compiled by Asset Risk Consultants to help charity trustees and their advisers place charity portfolio performance into peer group context.

The portfolio can be constructed or adapted for clients by wealth managers and financial advisers using ETFs listed on the London Stock Exchange and is available through platforms and/or brokerages.

Portfolio managers and financial advisers working with charities can license the portfolio directly from Elston Consulting, or on request to their platform provider.

Most recently Elston celebrated one year since the launch of its two smart beta indexes, reflecting the success of smaller players in the smart beta space.

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