Style Name:  Limited Exclusions

Investment funds which exclude a relatively small number of companies as a result of their ESG strategy.

Brief description of Style

Funds with ‘Limited Exclusion’ strategies exclude a small number of companies as a result of their published ethical or ESG strategy.

They may for example, have one or two areas of ‘ethical’ exclusion, such as ‘Avoid tobacco companies’ or ‘Avoid companies involved in the manufacture of cluster munitions’.

Alternatively, they may exclude for example the worst 20% of companies (across all sectors) when assessed against a named ESG rating methodology. The aim of strategies of this kind is typically to reduce ESG (environmental, social and governance) related risks for investors.

These exclusions may be the fund’s core ‘ESG’ strategy – or the management company may be more focused on stewardship (engagement)  activity which requires them to have access to contraversial companies in order to encourage necessary and beneficial changes.

Impact on investment strategy

These exclusions tend to have a relatively minor impact on where a fund can invest – meaning that they may appear to be ‘unscreened’ funds.

Who is this Style most likely to appeal to?

This SRI Style is most likely to suit clients who want to avoid only the industry the fund excludes – or companies that are widely agreed to be ESG laggards.

This style may also appeal to people who want to encourage the transition to more sustainable practices but users should check the ‘Responsible Ownership’ fields on Fund EcoMarket to see if individual funds are active in this way as strategies vary.