All of Troy’s investment strategies follow the same investment philosophy. Our aim is to protect investors’ capital and to increase its value year on year. The principle of first preserving investors’ wealth means that Troy is first committed to properly assessing the risks of any potential investment, even before trying to quantify the potential return.
A significant part of this process is to understand and assess the significant factors that may impact the long-term returns from a particular business. It is within this context that our research team seeks to assess non-financial ESG factors. This is an integrated part of our wider analysis process, which includes, amongst other items, an assessment of the relevant business’ strategy, financial performance and capital structure. Troy defines incorporation of an assessment of ESG factors within its investment research process as the fundamental analysis of non-financial ESG factors that materially influence the potential long-term returns received by investors. We consider long-term to mean more than 5 years. For such a risk/opportunity to be material, both the probability of a detrimental/positive impact on the value of an investment and the magnitude of that impact must be non-de minimis.
We do not seek to narrowly define or limit the factor categories but rather appreciate that such analysis must necessarily take place in the context of the wider assessment of risk and reward.
It is our aim to ensure ESG factors are incorporated into the analysis process from the outset and as such it should be the responsibility of all members of the investment team to contribute to this process. All Troy’s mandates are populated from a collectively created investment universe of researched stocks that analysis has shown meet our quality and risk criteria and therefore the ESG factors are equally incorporated into all of Troy’s mandates.
The only vehicles to combine incorporation strategies are the Trojan Ethical Income Fund and the Trojan Ethical Fund. These funds apply a negative screen in accordance with the published ethical investment criteria in addition integrating ESG factors into at the stock specific research level.