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Brummer & Partners AB

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

We strive to build a sustainable business model by bringing together skilled portfolio managers pursuing different investment strategies in a corporate group.

Brummer Multi-Strategy (BMS) invests in single-strategy hedge funds managed within the group. These hedge funds are managed by different investment management teams, which operate independently of each other with different investment profiles and a low internal correlation to each other and traditional asset classes over time. All hedge funds strive to generate long term competitive risk-adjusted returns that are independent of market development. In our search for new investment management teams to add to the group, we look for investment strategies which we believe will improve BMS’s ability to generate a competitive and sustainable risk-adjusted return over time.

Investing responsibly is about common sense. It is part of the duties of a portfolio manager to analyse relevant and material risks and opportunities regardless of whether they are classified as ESG factors or, say macroeconomic trends and political risk. Making well informed investment decisions is essential to our ability to achieve our goal of generating a sustainable and competitive risk-adjusted return over time.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

All our funds pursue different investment strategies and together form a well diversified portfolio in Brummer Multi-Strategy (BMS). In our search for new investment management teams to add to the group, we look for investment strategies which we believe will improve BMS’s ability to generate a competitive and sustainable risk-adjusted return over time.

Investing responsibly is about common sense. It is part of the duties of a portfolio manager to analyse relevant and material risks and opportunities regardless of whether they are classified as ESG factors or, say macroeconomic trends and political risk. The identification and integration of financially material ESG factors requires continuous learning. Relevant ESG scopes such as understanding climate change risk and opportunities and how those impact different assets and asset classes over various time-horizons is a never-ending challenge. As such, making well informed investment decisions is essential to our ability to achieve our goal of generating a sustainable and competitive risk-adjusted return over time. As Brummer & Partners encompasses different investment strategies and because our funds invest in different types of financial instruments, each fund’s approach to responsible investment needs to be adapted to its specific situation and circumstances.

Brummer & Partners AB and Brummer Multi-Strategy AB (the manager of BMS) have separate policies for responsible investment under which the various investment management firms in the group are requested to draw up their own policies and define what responsible investment means to them. The hedge funds in which BMS invests are supported by Brummer’s Sustainability and Risk Control teams. The group wide Sustainability team supports the investment managers with advice and recommendations relating to responsible investment and the Risk Control team monitors compliance with the policies on a quarterly basis.

BMS together with the other funds in the group have decided to exclude long and short investments in companies involved in controversial weapons and long investments in coal. The Risk Control team screens all funds against a third party ESG research provider (ISS-ESG) and their database quarterly to identify any holdings in such companies.

The funds are also screened for holdings which violate international standards on environmental protection, human rights, labour standards and anti-corruption. The purpose of the screening is not necessarily to encourage the funds to exclude companies which violate international standards. Instead, the Sustainability team engages in dialogue with the funds on the investments concerned and ensure that the chief investment officers are aware of the associated ESG issues and factor these into their analyses. There may be good reasons to invest in a red-flagged company, for example if management is aware of the problems and is taking action to address them, and this is expected to have a positive impact on the share price. Hedge funds also have the option of shorting a company, and companies with poor ESG records are typically short candidates for hedge funds. When a hedge fund shorts a company this sends a signal to management that the portfolio managers do not have confidence in the company.

Responsible investment tools:

  • ESG integration where applicable
  • Engagement with our funds on portfolio holdings
  • Engagement with funds' portfolio holdings on ESG issues
  • Exclusion of controversial weapons and long investments in coal

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

The funds within the group factor in climate change risks and opportunities into investment strategies when they are considered to be financially material. Brummer & Partners acknowledges Agenda 2030, the global trend of awareness of climate change, increasing regulatory risk and consumer demands on for example fossil fuel intensive products and services. Some industries and sectors have reached further than others in terms of embracing renewable energy sources and this creates an interesting market dynamic which opens up both investment opportunities and risk. It is likely that market pricing consensus in commodity markets as well as across equity and corporate bond markets will be increasingly impacted by indirect or direct exposure to climate change risks and opportunities. The funds within the group employ widely different investment strategies, invest across a diversity of asset classes and are well positioned to generate returns and manage risk as these opportunities and risks materialise over time.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

The timescales depend on each investment strategy, and the underlying financial materiality. The timescales are managed over short, medium and long term

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

Explain the rationale

Brummer & Partners AB do not publicly endorse the TCFD in a formal way, but acknowledges the reporting standard as a positive development in light of transparency and global awareness of climate related risk exposure.

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

Brummer & Partners Sustainability team is undertaking a group wide climate change risk and opportunity analysis of the Brummer group funds, with a focus on BMS. The nature of the output is expected to change and evolve over time, but climate change related risks and opportunities are evaluated and acted upon within the portfolio management processes of the group funds in the same way as other factors that are deemed to be financially material.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

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02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

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URL/Attachment

02.3. Additional information [Optional].

The Swedish version of our website is open and available to anyone. The English version is password protected due to regulatory restrictions. The password is however automatically generated and not restricted to clients only. On our "About us"-page we describe the firm wide approach and on the fund specific pages we describes each funds' approach in more detail.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Brummer investment managers have Conflict of Interest policies in place covering areas such as:

  • Appropriate number of employees with appropriate skills and knowledge in terms of the assets and strategy managed
  • Appropriate technical systems
  • Third party evaluations of the systems and controls in place
  • Personal account dealing policies
  • Ethical guidelines
  • Alignment of interest, e.g. the portfolio managers invest a major share of their personal wealth in the funds' that they manage and compensation models aligning investment team members' interest with the investment managers' and unitholders'
  • Fee structure including performance fee, high water marks and hurdles
  • Any change in the funds' risk levels has to be communicated to the unitholders
  • Best execution policies
  • Liquidity policies managing the potential conflict of interest between redeeming and remaining unitholders, et cetera.

 

 

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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