We add an aditional layer to the classical economic research based, mainly, on macroeconomic figures and crossed guarantees. For such layer we gather publicly available data for which we set a minimum standard. For example:
% government spending in education: government spending in education must be at least 5% of total government spending.
% government spending in health: public issuers must spend at least 10% of total government spending in health matters.
% government spending in defense: public issuers will have to spend at most 10% of total government spending in military matters.
% government spending over GDP: government spending must be at least 35% of GDP.
EPI score: the score given by Yale University about Environmental Performance Index has to be at least a 70/100.
After ranking each country based on its score, we have established three levels: fully complying countries will be part of our investment universe and are assigned a level 1. Countries missing at most 1 requirement will be included a level 2. Finally, countries missing more than one requirement are given a level 3.
There are no further investment limitations than the legal ones (percentage weight of total portfolio) for Level 1 countries. In order to be conservative, we have established a limit of up to 3% of the fixed income portfolio for Level 2 countries. These companies will have a limitation to represent as a whole a 20% of the fixed income portfolio.
Please, notice that this methodology is still on its first version. It's evolving very quickly, so its second version will available during 2019.