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Catella Fondförvaltning AB

PRI reporting framework 2019

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Investment process

HF 06. ESG data, research and other resources used

Please describe the ESG resources and tools used in your investment decision-making process.
Category of ESG
Reason for use
          engagement, risk and screening
        
          engagement, risk and opportunities
        
          
        

specify

          own research
        
          inhouse research
        
Select and explain how these resources are incorporated into the investment and risk management process?
Category of ESG
Investment/risk management process
Additional text (optional)
ESG data (proprietary, 3rd party, etc.)
          
        
ESG research (broker, etc.)
          
        
Other resources/tools/practices
          
        

HF 07. ESG incorporation into quantitative and fundamental analysis

07.1. Does your organisation uses quantitative analysis?

07.2. Does your organisation uses fundamental analysis?

Please indicate at which level ESG is incorporated into the analysis.
Fundamental approach
ESG incorporation
Outcomes and assessment/review

Please specify

          thematic
        
          thematic
        

07.3. Additional information [OPTIONAL]

Generally speaking, we look for companies that are both driven by sustainability and can demonstrate attractive financial qualities and a clear profit and return trend that is underestimated by the market. We use the UN 2030 Agenda for Sustainable Development as a basis for identifying business models that can benefit structurally by offering a solution to one or more of the 17 Agenda 2030 Goals. We have identified four themes that we believe are potential sources of structural growth and profitability for companies exposed to these themes. Last but not least, we study the extent to which company financial statements are affected by sustainability. We enhance our understanding of the long-term potential of the business model by integrating sustainability with financial analysis.


HF 08. Changes to the RI incorporation process over the past 12 months

08.1. Could you please indicate whether there have been any changes to your RI incorporation process over the past 12 months (e.g. additional resources, information sources)?

08.2. If yes, please describe them.

          We took the first steps beyond PRI during 2018. We have implemented a ESG exclusion and inclusion strategy and set an engagement framework.
        

HF 09. Integration of Active Ownership

09.1. Please select and explain how active ownership practices are integrated into investment decisions.

          When Catella Fonder exercises its voting rights, it does so in accordance with the investment objectives and policy of each fund as set forth in the fund rules for each respective fund
https://www.catella.com/en/sweden/catella-fonder/policys-and-reports/ownership-policy
        
          OUR SHAREHOLDER ENGAGEMENT CAN BE DESCRIBED BASED ON THREE ASPECTS
4.1.1 ONGOING EFFORTS:
We engage in ongoing dialogue with a large number of companies traded on Nordic stock exchanges. The topics include financial matters, shareholder dialogues and sustainability. We strongly believe that the sustainability analysis must be integrated with the financial analysis to be value-creating in the truest sense. This work is ongoing as a natural and integrated aspect of the traditional fund manager role, where we estimate the company’s potential for future growth and profitability. By adding an assessment of the extent to which sustainability strengthens or weakens the company’s circumstances, we increase our understanding and thus the reliability of our forecasts.
4.1.2 QUARTERLY:
To delve deeper into the issues, we hold quarterly internal sustainability seminars at which we compare our company analysis to that of an external service provider (Sustainalytics) to deepen our expertise. Sustainalytics evaluates corporate sustainability programmes and monitors current controversies and problems. We also use Sustainalytic’s research to discover which companies are at higher risk (low scores in relevant areas) or have potential to improve their sustainability reporting. Based on that information, we can identify investment candidates and prioritise future shareholder engagement.
4.1.3 BIANNUALLY:
All holdings in the funds and their relevant benchmarks are screened twice a year to ensure compliance with our limits and restrictions. The screening gives us a list of companies that are violating international norms and conventions, as well as companies affected by our established limits at the fund level.
        

HF 10. Examples of ESG risks/opportunities in investment decisions

10.1. Please provide examples of where ESG risks and opportunities were incorporated into the investment decisions over the past 12 months.

Hedge Funds Strategy
Event driven|Risk parity
ESG factors
Social
ESG risks/opportunities
          Short positions in beer companies (Carlsberg)
        
Financial risks
          regulation and restrictions in important markets
        
Scope and process
          ESG integration and active inclusion
        
Outcomes
          the position had a small positive value added throughout the year.
        
Hedge Funds Strategy
Event driven|Relative value|Risk parity
ESG factors
Social
ESG risks/opportunities
          Long positions in welfare companies Attendo, Ambea, and Humana that provide high quality individual and elderly care in the Nordics. This is a challenge government’s face throughout the region and the private companies’ willingness to take risk and build homes that will be filled in the coming years is a financial opportunity that is bases on a sustainability challenge. Demographic changes with an increasing elderly population drives the need for elderly care.
        
Financial risks
          Margins fall when the rate of new openigns is high.
        
Scope and process
          ESG integration and active inclusion
        
Outcomes
          Welfare holdings in total contributed with a positive value added throughout 2018
        

10.2. Based on your example(s) provided above, please specify whether the incorporation of ESG factors affected the risk-adjusted returns of your hedge funds.


HF 11. Derivatives products and ESG impact

11.1. Do you use derivatives instruments as part of your hedge funds strategies and/or Funds of Hedge Funds?

Please select all the applicable categories of derivatives used.
Listed/OTC
Category of derivatives

specify

          CFDs
        

11.3. Could you please explain whether and how these derivatives impacted the risk-adjusted returns of your hedge funds investments?

Impact

Outcomes

          Less volatile performance. Positive returns on short positions. Currency hedging. Adjustment of fixed income duration. Potential for risk deleveraging.
        

11.4. Would you indicate whether the use of derivatives triggered ESG risks/opportunities at the fund level?

11.5. Additional information [OPTIONAL]

          
        

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