Willis Towers Watson’s UK DC master trust, LifeSight, has announced that it will be allocating around half of the equity investments in the default fund to ESG investments by Q4 2018.

It is the first master trust of its kind to make ESG a major part of the default fund and the allocation will be split between two strategies.

The first is the MSCI Adaptive Capped ESG Universal Index, which invests in developed and emerging markets with a diverse portfolio that spreads capital and risk more evenly between stocks. It also tries to invest in companies with strong ESG attributes.

The second is the Robeco Global Sustainable Multi-Factor Equities Index, which “invests in equities in a systematic manner, allocating to individual stocks based on a number of factor attributes such as valuation, quality, momentum and low volatility”.

LifeSight head of proposition development, David Bird, commented: “The construction of these two vehicles has enabled us to confidently make this substantial change to the default fund’s asset allocation, and keep LifeSight’s investment approach ahead of the curve and still offering great value for members.”

The master trusts’ selection of these strategies is in line with Willis Towers Watson’s pledge to follow sustainable investment strategies, namely “long-term strategies that integrate ESG factors and effective stewardship”.

Bird concluded: “ESG factors have increasingly been on the investment agenda for DC trustees, so they need to be thinking about where it fits into their scheme’s glide path, assessing member demand and developing the right strategies to deliver for them.”

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