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Jupiter Asset Management

PRI reporting framework 2020

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You are in Indirect – Manager Selection, Appointment and Monitoring » Selection

Selection

SAM 02. Selection processes (LE and FI)

02.1. Indicate what RI-related information your organisation typically covers in the majority of selection documentation for your external managers

Your organisation’s investment strategy and how ESG objectives relate to it

ESG incorporation requirements

ESG reporting requirements

Other

No RI information covered in the selection documentation

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
Your organisation’s investment strategy and how ESG objectives relate to it
ESG incorporation requirements
ESG reporting requirements
Other
No RI information covered in the selection documentation

02.2. Explain how your organisation evaluates the investment manager’s ability to align between your investment strategy and their investment approach

Strategy

Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements

Assess the quality of investment policy and its references to ESG

Assess the investment approach and how ESG objectives are implemented in the investment process

Review the manager’s firm-level vs. product-level approach to RI

Assess the ESG definitions to be used

Other

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements
Assess the quality of investment policy and its reference to ESG
Assess the investment approach and how ESG objectives are implemented in the investment process
Review the manager’s firm-level vs. product-level approach to RI
Assess the ESG definitions to be used
Other
None of the above

ESG people/oversight

Assess ESG expertise of investment teams

Review the oversight and responsibilities of ESG implementation

Review how ESG implementation is incentivised

Review the manager’s RI-promotion efforts and engagement with the industry

Other

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
Assess ESG expertise of investment teams
Review the oversight and responsibilities of ESG implementation
Review how is ESG implementation enforced /ensured
Review the manager’s RI-promotion efforts and engagement with the industry
Other
None of the above

Process/portfolio construction/investment valuation

Review the process for ensuring the quality of the ESG data used

Review and agree the use of ESG data in the investment decision making process

Review and agree the impact of ESG analysis on investment decisions

Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)

Review and agree manager’s ESG risk framework

Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives

Review how ESG materiality is evaluated by the manager

Review process for defining and communicating on ESG incidents

Review and agree ESG reporting frequency and detail

Other, specify

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
Review the process for ensuring the quality of the ESG data used
Review and agree the use of ESG data in the investment decision making process
Review and agree the impact of ESG analysis on investment decisions
Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)
Review and agree manager’s ESG risk framework
Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives
Review how ESG materiality is evaluated by the manager
Review process for defining and communicating on ESG incidents
Review and agree ESG reporting frequency and detail
Other, specify
None of the above

02.3. Indicate the selection process and its ESG/RI components

02.4. When selecting external managers does your organisation set any of the following:

ESG performance development targets

ESG score

ESG weight

Real economy influence

Other RI considerations

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
ESG performance development targets
ESG score
ESG weight
Real world economy targets
Other RI considerations
None of the above

02.5. Describe how the ESG information reviewed and discussed affects the selection decision making process.[OPTIONAL]

          With multiple information sources and deep experience, we aspire to identify emerging material risks when we encounter them. The combination of six monthly, one-on-one meetings with all investee managers and ad-hoc onsite visits to their places of work (as detailed earlier) provides us with insightful opportunities to examine numerous material risks. These vary widely: for example, how have managers demonstrated integration of ESG and how attuned are they to the outcome from the differing ESG ratings of investee companies (i.e. by third parties, be they proxy voting agencies, MSCI ESG Rankings, etc)?  What is the significance of youth and/or turnover in a fund’s compliance or risk executives?  How effective is investment risk monitoring and oversight, be it outsourced to an external Authorised Corporate Director or executed internally? What is the relationship between internal Governance professionals and the managers entrusted with our clients’ savings? We study the nuances and detail and strive to calibrate the impact and outcomes.  
The Jupiter Independent Funds Team recognises that ESG integration and reporting are evolving: it differs widely by asset class, region, fund house, fund team and portfolio manager.  What is tailored, invaluable best practice for one, may be irrelevant ‘green washing’ for another. Moreover, many definitions have yet to be defined or adopted in a standardised manner by investors or companies, particularly within climate change.  We believe that we can add value through encouraging and engaging with underlying managers.  We challenge JIFT managers individually to disclose and demonstrate how they adhere to signatory status and how they exercise their duties as owners of investee companies, particularly where companies with poor ESG scores are held: what is their strategy and output of their engagement?  
Finally, challenging managers on their stewardship credentials would be a threadbare and ineffective conversation without data.  Our ESG database is updated annually and ad-hoc (for those offering more regular disclosure), ranging from RPFs’ to detailed working examples of engagement output or failing this, subsequent sale.  Our engagement can be a catalyst of material evolution on behalf of investee managers and our team is frequently requested to talk to investee Governance specialists and their consultants.  Whilst it can be challenging to calibrate the precise impact to underlying stakeholders, we strive to continue to exercise our stewardship responsibilities on behalf of our Jupiter Merlin investors.
It is important to further note that the above investment process naturally leads us to active managers who invest with integrity and seek to invest their clients’ capital in sustainable companies.   With typically long holding periods and low turnover, the managers behave as long-term owners on behalf of their unitholders.  Engagement and voting are integral to their alpha generation - their raison d’etre - and increasingly, they can demonstrate the outcomes of their effective engagement.  With the exception of the Real Return strategy, funds with very high turnover, those using significant derivatives or leverage, in passives or AI, factor-driven strategies or in structured products are generally avoided.
        

SAM 03. Evaluating engagement and voting practices in manager selection (listed equity/fixed income)

03.1. Indicate how your organisation typically evaluates the manager’s active ownership practices in the majority of the manager selection process.

Engagement

Review the manager’s engagement policy 1

Review the manager’s engagement process (with examples and outcomes)

Ensure whether engagement outcomes feed back into the investment decision-making process

Other engagement issues in your selection process specify

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
FI - Securitised
Review the manager’s engagement policy
Review the manager’s engagement process (with examples and outcomes)
Ensure whether engagement outcomes feed back into the investment decision-making process
Other engagement issues in your selection process specify

(Proxy) voting

Review the manager’s voting policy

Review the manager’s ability to align voting activities with clients’ specific voting policies

Review the manager’s process for informing clients about voting decisions

Ensure whether voting outcomes feed back into the investment decision-making process

Review the number of votes cast as a percentage of ballots/AGMs or holdings and available rationale

Other voting issues in your selection process; specify

LE

Review the manager’s voting policy
Review the manager’s ability to align voting activities with clients’ specific voting policies
Review the manager’s process for informing clients about voting decisions
Ensure whether voting outcomes feed back into the investment decision-making process
Review the number of votes cast as a percentage of ballots/AGMs or holdings and available rationale
Other active ownership voting issues in your selection process; specify

03.2. Describe how you assess if the manager’s engagement approach is effective.

03.3. Describe how you assess if the manager’s voting approach is effective/appropriate

03.4. Additional information [OPTIONAL]

          
        

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