Royal London Cash Plus M Inc (OEIC/Unit Trust)
SRI / Ethical Overview
The Fund invests mainly in cash, deposits, money market instruments and short dated government securities, which meet predefined ethical criteria. The policy of the Fund considers all of the following ethical issues: armaments and tobacco.
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £4,550.22m as of 31 May 2017.
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds under management: £11,793.22m as of 31 May 2017.
- Total value of assets covered by responsible ownership policy: £1,416.04m as of 31 May 2017 (Please note that this figure only includes our sustainable range, however, RLAM’s Responsible Investment Policy will detail how this is an over-arching approach across most of the firm’s assets).
- Total assets under management: £104,507.32m as of 31 May 2017.
SRI Policies (Primary strategy in bold)
- 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.
- 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.
- Negative selection bias Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
- Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
- 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.
- Vote all shares at AGMs/EGMs This fund manager always votes the shares they own at annual general meetings (and extraordinary general meetings). This is a key indicator of 'responsible share ownership' and companies taking an interest in the future of the companies they part own.
- 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'.
- Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
- Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
- 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
Our ethical investment process begins with screening for eligible investments, which is conducted by specialist independent consultancy EIRiS (Ethical Investment Research Services). With over 25 years’ experience, EIRiS is a leading provider of research into the environmental, social and governance (ESG) and ethical performance of companies. RLAM’s ethical framework combines the avoidance of companies involved in excluded activities with the identification of best of breed companies in permitted sectors.
Companies that generate over 10% of their turnover from either one or a combination of the following categories are excluded:
- Armaments: manufacturing armaments or nuclear weapons, or associated strategic products
- Tobacco: growing, processing or selling tobacco products
If a company breaches this threshold, then it is likely that that company’s involvement in that excluded sector is a noteworthy part of their business and strategy.
Also, this threshold is deemed to be realistic and appropriate in terms of assessing a company, given that it may not be possible to always pinpoint the exact turnover derived from an excluded activity. This threshold ensures that a minimum of 90% of each holding meets the ethical criteria.
There is no static list of firms and organisations eligible for investment by the Fund. The ethical criteria screening process is ongoing and implemented pre-trade as part of the rigorous RLAM in-house credit analysis process coupled with independent ethical screening of issuing companies (and other companies that we request adhoc) carried out by the EIRiS. As per all of RLAM’s unit funds, weekly the Fund managers will sign off on the portfolio construction certifying that it adheres to the investment and borrowing powers as set out in the prospectus, and the Royal London Unit Trust Managers (RLUTM) Executive Committee will review the ethical criteria themselves on a quarterly basis.
Resources, Affiliations & Corporate Strategies
As previously outlined, our ethical investment process screening is conducted by specialist independent consultancy EIRiS (Ethical Investment Research Services). With over 25 years’ experience, EIRiS is a leading provider of research into the environmental, social and governance (ESG) and ethical performance of companies.
RLAM monitor the ratings of all of the institutions we lend to on a real-time basis by subscribing to Standard & Poor’s, Moody’s and Fitch’s online ratings services. RLAM is notified immediately of any credit change, ensuring the Funds maintain the highest credit quality. Research for government bonds is conducted internally within the Government Bond team. As value investors, we emphasize the importance of research and believe that individual stock selection will be the largest and most consistent contributor within the Funds. The close working relationship between the Government Bond team and the rest of the Fixed Income team is central to the research process.
Due to the unique nature of these Funds, company visits are not crucial to the process. The majority of the Funds’ assets are invested in money market instruments. Decisions regarding which institutions to invest with are governed by several criteria, including credit ratings as determined by the three major credit rating houses.