Broker-dealer Oppenheimer Asset Management has added environmental, social and governance (ESG) products to its wealth management platform.
Jeff Sutton, managing director of the consulting group at Oppenheimer Asset Management, and his team have added three equity ESG separately managed accounts (SMA) and one fixed income SMA with an ESG focus to the platform.
Sutton and his team of nine analysts are responsible for selecting investment options on the firm’s $13 billion third-party manager platform and a more concentrated recommended list, which consists of roughly 60 SMAs and 60 mutual funds for use by the firm’s 1,100 financial advisors.
The wider platform has access to 3,330 funds and 142 SMAs.
On the equity side, the team added the ClearBridge Large Cap Growth SMA, Clearbridge Dividend Strategy SMA and ClearBridge International Growth ADR SMA.
The ClearBridge Large Cap Growth ESG SMA is managed by Peter Bourbeau, Mary Jane McQuillen and Margaret Vitrano and the ClearBridge Dividend Strategy ESG SMA is managed by Hersh Cohen, Peter Vanderlee, Michael Clarfeld, Diane Keady and McQuillen.
In October, Envestnet added the ClearBridge International Growth ADR SMA to its high conviction list.
On the fixed-income side, the Oppenheimer team has added the Breckenridge Intermediate Sustainable Government Credit SMA.
There are future plans to build out ESG mutual fund and exchange-traded fund options as well, Sutton said.
Sutton said coincidentally ClearBridge had recently launched two active ESG ETFs based on two of the strategies he added in SMA format and that he may look to add these in the future.
‘They just launched them this year so there’s not a lot of volume yet… we want to wait until there is a little more liquidity before we give them our stamp of approval,’ he said.
ClearBridge launched the ClearBridge Large Cap Growth ESG ETF and the ClearBridge Dividend Strategy ESG ETF in May.
Sutton said Breckenridge partnered with John Hancock to launch the $51.9 million John Hancock ESG Core Bond fund, which follows the same strategy as the SMA he added, although unlike the SMA, the fund has the ability to invest in mortgage-backed securities.
‘Eventually we want to start using the two ClearBridge ETFs and the John Hancock fund that Breckenridge subadvises,’ he said.
The ESG initiative is still in the early stages and Sutton said that the build-out depended on the demand Oppenheimer sees from its clients.
‘It’s just a start, we want demand to be there before we really start dedicating a lot of resources to the effort but it’s something I really believe in,’ he said.
In the future he hopes to have at least a dozen options for each vehicle, noting that he is interested in building out the equity ESG line-up in US small-cap and emerging markets.
On fixed income, he said the $100.3 million Calvert Green Bond fund was interesting and that TIAA-Cref also has an interesting mutual fund.
TIAA Cref has four responsible investing funds consisting of the TIAA-Cref Social Choice Bond fund, TIAA-Cref Social Choice Equity fund, TIAA-Cref Social Choice International Equity fund and the TIAA-Cref Social Choice Low Carbon Equity fund.
‘We want managers that are engaging with corporate management and we think approaching it this way could in some cases enhance returns,’ Sutton said.