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Kagiso Asset Management

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

We believe that superior investment returns can be achieved by following a proven and effective investment process. We follow a bottom up process to harness our investment philosophy in a disciplined, yet flexible manner.

Most of our time is spent undertaking in-depth company, industry and individual company research. In our research process, we aim to provide an accurate assessment of the relative merits of a particular investment and to identify key drivers of its future cash flows.

It is within this process that we focus our resources on areas where we could have the most impact for our clients, and this includes the incorporation of ESG (environmental, social and governance) factors into our research and analysis process.

We believe this approach is likely to lead to outperformance in the long term.

After the research and analysis phase we initiate the active ownership phase, where we have chosen to use engagement as our method of being an active owner. We further vote on our proxies where eligible and engage with executive management and the board of our investee companies where we have concerns.

This has proven to be value accretive to our clients.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

We make investment decisions based on mispricings we observe in the market. Simply put, we buy investments that are priced below our considered assessment of intrinsic value and avoid those that we believe are overpriced.

Our fundamental research is valuation-based, we take a medium to long term view on the companies we own and we adapt to prevailing market conditions. The focus of our fundamental research is redirected as conditions change and, therefore, is applicable in most market environments.

We recognise that there is considerable danger in operating with the comfort of a false sense of certainty and the accompanying behavioural reinforcement cycles that lead to a distorted evaluation of new information. As a result, we understand that despite our best efforts we cannot possibly know all the facts.

This drives us to think more deeply, to work harder and to be more alert. We view the future in terms of probabilities, we explore alternative scenarios, diversify our positions, hedge risk and seek out potential asymmetries.

ESG considerations are an important part of our overall investment process. ESG integration into the investment process includes quantitative analysis of material ESG factors and inclusion of those in the valuation process. Incorporating ESG is a dynamic process that often requires a different approach for each company. We therefore spend a lot of time understanding the specific ESG issues a company faces and how we can best incorporate it into our investment thesis.

Once we own a company we become active owners by voting responsibly and engaging with companies on material ESG risk factors that impact valuation where we can have the most impact for our clients.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

We have included an example of a sector specific scorecard for the extractive or mining sector in our Responsible Investing policy and it serves as an example of what ESG issues we evalute in the mining sector, our other scorecards are available to clients on request with a full description of the metrics and performance requirements. We currently do not disclose our sector specific guidelines and formalised ESG guidelines as we view this as proprietary information and is therefore not disclosed but is available to our clients on request.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

We have a Conflict of Interest Policy, which addresses potential conflicts of interest that arise through the giving and receiving of gifts, allocation of trades to client portfolios, insider trading, etc. This policy addresses the avoidance of these potential conflicts. Where conflicts cannot be avoided, the policy ensures that there are sufficient processes in place to mitigate these potential conflicts.

03.3. Additional information. [Optional]

We have a short description of our conflicts of interest policy in our responsible investing policy, we also have our conflicts of interest policy available to clients or potential clients on request.


SG 04. Identifying incidents occurring within portfolios (Private)


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