Impact investing platform Goodfolio has written to its clients to tell them that it is closing down and that clients must sell out of their investment and transfer their funds, away from the platform within 30 days.
ESG fails to gain traction
Goodfolio says that it has been unable to attract sufficient business to the platform to make it viable in the long term. In other words, it failed to achieve critical mass or even generate enough momentum to indicate that it would do so in the near future.
As we recently noted UK investors, and in particular older wealthier cohorts therein, are increasingly prioritising returns over ESG credentials when it comes to managing and investing their money. That behaviour has become more apparent during the UK cost of living crisis.
Goodfolio clients have two options the first is to sell their investments and transfer the proceeds to their bank account.
The alternative is for them to sell their investments and then transfer the proceeds to another provider.
Though they will first have to create an account with a new provider and then instruct the new provider to initiate the transfer.
Goodfolio has assured clients that their funds will remain safe during the wind-down period, as they are held with WealthKernal. Goodfolio is also an appointed rep of RiskSave Technologies, an FCA-regulated firm and as such its client monies are covered by the UK FSCS.
Disappointing ESG returns
One reason may be the disappointing returns generated by dedicated ESG investments which are often outperformed by non-ESG-centric investments or by assets and sectors that have ESG credentials as by-products of their day-to-day business.
The S&P 500 Information Technology sector is a perfect example of this trend returning a little under 18.0% over the last 24 months compared to a return of -0.14% in the S&P 500 ESG index and -2.0% in the MSCI USA ESG Select ETF.
Goodfolio is the third casualty over recent months in the impact and ESG investing space. With Clim8 shuttering completely and Tulipshare pivoting its business away from brokerage and investing. Both firms were unable to generate profits or raise further VC funding to finance them until such time as they could.
He believes that many more start-ups will fail in the current economic climate and its hard to disagree with him about that.