Our equity fund range includes active fundamental stock-selecting funds, active quantitative funds, and passive funds.
ALL FUNDS: All funds (active and passive) apply an exclusionary screen for controversial weapons and securities in breach of EU sanctions.
ACTIVE FUNDAMENTAL FUNDS: In our active fundamental funds, our aim is to understand the long-term intrinsic value of company, and any risks to that value. Indeed, we aim to assess the downside risk before the upside potential. Consequently, issues which may impact a company in the short or long-term are considered highly relevant to our analysis, and this includes many environmental, social and governance issues. As such, we integrate ESG considerations into our security analysis, alongside other fundamental factors. We also engage with companies as deemed appropriate (see separate section on engagement).
In addition, certain of our equity funds (labelled ‘Ethical’) use a negative screen to exclude companies. The exclusionary criteria for these funds result from ongoing consultation with clients, but are broadly categorised as norm-based and sector-based criteria:
- Norm-based screen for violations of global norms: environmental protection, human rights, labour standards and anti-corruption.
- Sector-based screen for companies with certain exposures to sectors such as: alcohol, tobacco, gambling, pornography, weapons and thermal coal & oil sands.
PASSIVE FUNDS: with regards to our Passive funds, we work on the understanding that the concept of ESG incorporation in investment decision-making (Principle 1) does not apply to funds whose sole objective is to replicate an index - unless the index itself is focused on ESG considerations. Accordingly, we only apply active ownership (Principle 2) to these funds which, as a result, participate in voting and engagement.
ACTIVE QUANTITATIVE FUNDS: With our quantitative funds, there is an aim that the portfolio’s ESG score gradually improves over time, so that at rebalancing quantitative ESG information is integrated into portfolio construction decisions on a ceteris paribus basis. As it is for the passive funds, we only apply active ownership (Principle 2) to these funds, specifically proxy voting.