Quilter Cheviot Climate Assets A Ret AccGBP (OEIC/Unit Trust)
SRI / Ethical Overview
The Climate Assets Fund seeks to achieve long term capital appreciation and provide income by multi-asset allocation and multi-thematic investment. The fund invests around the world with a focus on investment opportunities across sustainability, underpinned by five investment themes: Energy (low carbon), Food, Health, Resource and Water.
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £52,082,241.83 as at 31/05/17
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds under management: Circa £214m as at 31/05/17
- Total value of assets covered by responsible ownership policy: £21.8bn as at 31/03/17
- Total assets under management: £21.8bn as at 31/03/17
SRI Policies (Primary strategy in bold)
- Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
- Health & wellbeing policies Find ethical or sustainable investment fund options that have a policy which supports (ie aims to invest in) companies that are viewed as offering positive lifestyle, health or wellbeing related benefits.
- Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
- Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
- Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
- Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
- Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
- Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
- Animal welfare policy Find ethical fund options that have policies that require specific animal welfare standards to be adopted by investee companies in order for them to be considered for inclusion within the fund.
- Nuclear exclusion policy Find ethical funds (and other options) that have a published policy that sets out the fund's position on avoiding or limiting exposure to nuclear power. See fund literature for details of their policy.
- Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
- Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
- Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
- Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
- Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
- Invests in clean energy/renewables Find ethical, sustainable investment and other environmentally aware fund options that aim to invest in companies in the clean technology and renewable energy sectors. Fund strategies vary. Some funds may have limited exposure to this area, others may have significant exposure. Check fund literature for details.
- Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
- Fracking and tar sands excluded Find fund options that avoid companies involved in fracking and tar sands - which are widely regarded as more controversial methods of oil and gas extraction.
- Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
- Pornography avoidance policy Find ethical fund option - and in some cases other options - that avoid companies that derive significant income from pornography. See fund details for further information.
- Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
- RSMR Rated Find funds that are rated by research agency 'Rayner Spencer Mills Research' (awarded 'RSMR SRI Rated' status). Read fund literature on contact RSMR for further information.
- Positive selection bias Find funds where their main 'ethical approach' is to invest in companies that are considered to be positive/good or useful to people and/or the environment. The fund may also have negative avoidance criteria - see fund details to read more about fund strategies.
- Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
- Over 50% large cap Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion.
- Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
- Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
- Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.
- Aims to generate positive impacts Find funds that aim to help deliver positive social or environmental impacts or outcomes through their investment decisions - which typically involves holding companies that are viewed as being necessary or beneficial. Strategies and approaches vary. A small number of funds have recently started to measure outcomes (see 'Measures Impacts' in the Policy filter). This is a new area - so most funds do not do this yet. See fund literature for further information.
- Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
- Clean energy themed Find funds that in clean technology / clean energy companies. See fund information for further details.
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
- In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
- UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
- Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
- Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
SRI / Ethical Policy
Quilter Cheviot’s investment process combines strong discipline with bespoke, flexible asset allocation and stock selection. Our approach is a combination of ‘bottom-up’ and ‘top-down’ analysis. We are not constrained by one particular investment style (such as growth, value etc.) and believe the best returns come from a flexible approach during different economic cycles. We aim to reflect our views on asset class and geographical allocation through the portfolio and support these with conviction ideas within our five investment themes: Energy (low carbon), Food, Health, Resource and Water. To select our holdings we use a combination of quantitative analysis, in-house fundamental research, brokers’ research notes and management meetings.
We recognize that well managed companies are better placed to generate long term returns to clients. As such, we aim to identify, understand and monitor the key environmental, social and governance (ESG) issues surrounding the companies, sectors and regions in which we invest. Although not all our investment portfolios are mandated by an exclusion policy, we have an increasing number of clients who wish to apply investment restrictions to their portfolios or aim to reflect their environmentally friendly lifestyle in their portfolios. Therefore we also employ an independent specialist firm to screen the securities researched by our analysts and advise which ones should be excluded amongst categories like alcohol, animal welfare, the environment and armaments.
We buy into the ethical screening service. The Climate Assets Fund does not invest in tobacco, alcohol, gambling, armaments and pornography. We take a pragmatic ethical stance and avoid investments in oil exploration, mining, genetic engineering, intensive farming and non-sustainable timber.
Resources, Affiliations & Corporate Strategies
Quilter Cheviot is determined to meet the challenges of a dynamic market environment within an investment framework that combines the skills of a dedicated research team with those of experienced investment managers, to provide the optimum return for our clients.
Quilter Cheviot is committed to offering a unique and differentiated product solution to its clients, including within sustainable and ethical investment. Today, there is a dedicated team of 4 people involved in implemented portfolios based on sustainable and ethical investment, with two dedicated fund managers. The Sustainable Investment team draws upon the expertise of our 20 strong sector and company analyst team to better understand investment risks and opportunities. The overall investment oversight is given by our Chief Investment Strategist.
Our equity analysts are organised on a global industrial sector basis to provide a broad spread across each market and they follow approximately 40-50 companies each. Typically, we look at cyclical trends and trigger points for change in areas such as competitive position, management change, restructuring, corporate activity and relative valuation.
Stocks are monitored using a wide range of valuation criteria including EV/EBITDA, PE, Yield, DCF, P/BV as appropriate to the industrial sector and market at that time. Low valuation alone is not sufficient to make a stock attractive. The characteristics of a good stock vary from sector to sector and will change with investor behavior through the economic and stock market cycle.
Collective Investments and Alternatives
Our sustainability focused portfolios invest in direct securities. For other investment strategies (i.e. not the Climate Assets/Sustainability mandates) funds are considered for inclusion in the universe on a monthly and independent basis by our Investment Fund Selection Committee. The universe provides a diverse collection of funds spanning all major global markets, across the market capitalisation spectrum, managed under various styles and with differing risk profiles.
Recommendations are made by each analyst in accordance with our investment strategy, involving both quantitative and qualitative analysis, with significant importance placed on meeting the individual fund managers and their teams. Quantitative data including alpha generation, beta, information ratios and tracking error are assessed.
Selected funds are assigned a risk status by the Investment Fund Selection Committee depending on the fund profile, the investment objectives, the number of holdings and fund size.
We have a specialist fixed interest team. The focus is on government and investment grade corporate debt. The team also provides valuable input to investment strategy and asset allocation as well as contributing towards the selection process for fixed interest collectives.
We draw on the research of leading investment houses as well as data from several brokers and other providers. We supplement this with our own research and meetings with management teams, maintaining excellent company and industry awareness using our own in-house team of analysts. Research recommendations are communicated to investment managers in the daily morning meeting, via email, on our research database and through weekly and monthly meetings.