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Osmosis Investment Management

PRI reporting framework 2020

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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
          alpha generation
        
          
        
          
        
          
        
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.)
          
        

HF 07. ESG incorporation into quantitative and fundamental analysis

07.1. Does your organisation uses quantitative analysis?

Please indicate at which level ESG is incorporated into the analysis.
Quantitative modelling
ESG incorporation
Outcomes and assessment/review
          uncorrelated sustainable alpha
        

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
          uncorellated sustainable alpha. Long book is significantly more resource efficient than the short book.
        

07.3. Additional information [OPTIONAL]


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.

          Osmosis has recruited additional research and portfolio managers in 2019, all focused on and with significant experience in RI, with the intent to strengthen and develop the RI incorporation process, which  for Osmosis corresponds to the Resource Efficiency Signal integration in long short and long only portfolios.
        

HF 09. Integration of Active Ownership

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

          Osmosis’ engagement campaign is an integral part of the research and data collection process. When key resource indicators cannot be found systematic engagement is carried out. In numerous cases, this has led to the targeted companies providing the research team with new or previously undisclosed figures. Alternatively, where more clarity around certain disclosed figures is required, companies are being contacted in a systematic way.
        

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
Equity Hedge
ESG factors
Environmental
ESG risks/opportunities
          Long Resource Efficiency / Short Resource Inefficiency - alpha generated on both sides of the book
        
Financial risks
          n/a
        
Scope and process
          n/a
        
Outcomes
          Uncorrelated alpha derived from a sector neutral factor neutral portfolio. Less energy / water waste owned in the long book than the short book. evidencing more sustainable companies are rewarded by the market and those with poor efficiency metrics are being penalized.
        

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

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

Impact

Outcomes

          Derivatives are solely used for the delivery of a total return strategy whereby dividends are reinvested on ex-date and for leverage purposes as the strategy requires synthetic leverage.
        

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

11.5. Additional information [OPTIONAL]

          
        

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