We have 7 independent investment teams who invested in listed equities throughout 2019.
The actively managed teams covered in this report are:
• Stewart Investors
• FSSA Investmet Managers
• Global Listed Infrastructure Securities
• Global Listed Property Securities
• Australian Equities Growth
• Australian Equities - Smaller Companies
Each of our listed equity teams have developed their own investment processes over many years by our leading investment professionals.
Responsible investment practices are applied by each of these teams in a way which complements their investment process and philosophy. Integration of ESG factors in bottom-up analysis, with a strong focus on company engagement is the common thread which tie our diverse investment capabilities together.
Our Stewart Investors team's sustainability strategies started in 2005 and in 2017 our Listed Infrastructure team launched a sustainable listed infrastructure fund.
In terms of screening, currently our firm-level policy is to screen out companies involved in the manufacture of cluster munitions and landmines, and companies/individuals on sanctions or high risk of sanctions lists.
Some examples include:
Stewart Investors: the principle of stewardship is central to Stewart Investors' investment philosophy and has been since 1988. All investment strategies strive to integrate ESG and sustainability considerations into every investment decision. To us, sustainability factors are investment issues and we identify them and their materiality through a bottom-up approach. We believe that sustainability is a driver of returns, not a trade-off, and we believe that in order to deliver attractive long-term returns for our clients we must fully integrate sustainability into our analysis.
FSSA: ESG is fully integrated into our single investment strategy and thus is implemented across all funds. As long-term and bottom-up investors we seek to invest in quality companies as defined by the strength of their management, franchise and financials. Considering ESG is therefore not just the ethical or right thing to do; to us, it is also entirely rational. It is only through analysing the extent to which a company addresses the interests of all stakeholders that we can construct an informed view on its prospects for the next decade – and it is these long-term prospects which inform our view on a company’s quality.
GLIS: ESG issues are fundamental to infrastructure companies, given they have significant service obligations and moral accountability to the communities in which they operate. Our team therefore integrates ESG analysis into stock selection through our Quality Ranking model.
The Quality Ranking is combined with a Value Ranking (which seeks to rank stocks in our focus list according to their relative mispricing), to provide an overall ranking of the securities on our focus list. This overall ranking is the focus of our stock selection and portfolio construction process.
Australian Small Companies: ESG considerations influence all our investment decisions to some degree, given that Sustainability is one of the six key criteria used in our evaluation of companies. ESG issues are also frequently raised with senior management during our engagement with companies, which contribute towards our view on the company.
Where ESG and sustainability factors are determined to have a material impact on profitability, they are quantified and can influence other factors, most directly in the valuation and financials of the stock. This would ultimately influence the active positioning in the portfolio, using the portfolio’s tiering system.