Capital is a discretionary investment manager with a bottom-up investment process focused on delivering long-term sustainable results. We are independently and privately owned, which has allowed us to develop a specific investment philosophy. “The Capital System” along with our code of ethics and culture of long-term investing, ensures a robust investment process which recognises the relevance of environmental, social and governance (ESG) factors in contributing to long-term sustainable businesses.
The "Capital System" is a unique approach designed to enable our investment professionals to focus on their highest conviction ideas. Our diverse group of portfolio managers and analysts bring complementary investment approaches, experience levels, backgrounds and areas of focus to each fund. Our portfolios are composed of individual managers' and analysts' highest conviction investment ideas. Combining the best independent decisions of experience professionals into one portfolio results in diversification and creates the potential for superior results over time.
Our investment professionals are sector specialists and have the depth and breadth of knowledge that enable them to make decisions that will enhance long-term value for our clients. We acknowledge the relevance of ESG factors in contributing to long-term sustainable businesses by integrating them into fundamental analysis and valuation and considering these ESG factors alongside financial, operational and economic indicators, amongst others. The long-term lens means that the identification of ESG risks and opportunities is intrinsic to building an understanding of a company’s long-term business model or a sectors' long-term prospects.
Our research approach also leads to opportunities to engage with companies. Our investment professionals collectively make thousands of company visits annually, regularly meeting with the executives, senior management and board members. These meetings allow our investment professionals the opportunity to engage with companies on a wide range of topics including ESG factors. We make use of our formal rights, such as the ability to vote at shareholder meetings, and informal influence, to enhance long-term value or to seek mitigation of risks that impact negatively on long-term value of the business.
ESG factors can also be part of a positive investment decision. Our analysts may recommend investing in companies which they believe can deliver superior returns over the long-term while providing sustainable environmental benefits. Recent investments have been made in companies which provide renewable energy, irrigation solutions in emerging markets and companies which deliver energy efficiency benefits. In each case the environmental or social benefit was seen as part of the reason that some of our analysts believed the company would be a successful investment.
We may exclude certain investments via negative screening, although these are generally client-specific at the account level rather than the fund level. For example, some of our clients have ethical (or other) reasons why they may not want to invest in securities of companies with certain business interests. These securities will be excluded from the investable universe. The criteria for exclusion of securities or sectors are chosen in discussion with our clients and our systems offer the flexibility for segregated accounts to exclude securities or sectors.