Trojan Ethical Income I Acc (OEIC/Unit Trust)
SRI / Ethical Overview
The Trojan Ethical Income Fund will invest based on specific ethical investment criteria as well as adhering to Troy Asset Management Limited’s fundamental stock selection process. Potential investments will be screened against these ethical investment criteria using a combination of third party data and the Investment Manager’s primary research. This screening process is designed with the intention of excluding investments which do not fit within the ethical investment criteria as set out below.
The present ethical investment criteria mean that Trojan Ethical Income Fund will not invest in any organisation which:
Armaments – (a) generates more than 10% of its total turnover from strategic military supplies relating to conventional weapons and/or (b) produces key parts of, or provides services for, cluster munitions systems, and/or (c) is alleged to have contravened the convention on anti-personnel mines in the last ten years and which has not addressed the allegations, and/or (d) manufactures products, or provides services, which are all or part of a nuclear weapons system.
Tobacco – makes more than 10% of its total turnover from tobacco products.
Pornography – derives more than 3% of its total turnover from pornography or adult entertainment.
Fossil Fuels – (a) derives more than 33% of its total turnover from the refining or extraction of, or generation of power from, fossil fuels and/or (b) derives more than 10% of its turnover from coal mining activities. Companies whose listing falls within the Oil & Gas sector are also excluded.
Alcohol – derives more than 10% of its total turnover from the sale or production of alcohol.
Gambling – derives more than 10% of its total turnover from gambling (including spread betting).
High Interest Rate Lending – derives more than 25% of its total turnover from high interest rate lending (high interest being defined as lending at an annual percentage rate (APR) of over 100%).
Troy employs Ethical Investment Research Services (EIRIS) Limited (“EIRIS”) to provide an ethical screening service and research in respect of the Trojan Ethical Income Fund. Troy will use the data and research provided by EIRIS as an element of the investment process. Where an investment is identified as no longer meeting the Sub-fund’s ethical investment criteria, the Investment Manager will seek to sell the investment within the following 90 days. The prices at which such an investment can be sold in these circumstances may be lower than the prices that might otherwise have been realised for the investment if such a sale was not required.
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £77m
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds: £77m
- Total value of assets covered by any additional ESG or responsible ownership policy: £77m
- Total assets under management: £9.6bn
(All Data As at 30th April 2018)
SRI Policies (Primary strategy in bold)
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Strictly screened ethical fund Find funds that have a high level of negative ethical avoidance. These funds are likely to exclude more companies than other ethical (and SRI) fund options. 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 invest in clean technology / clean energy companies. See fund information for further details.
- Responsible ownership / stewardship policy Find funds that have a policy that sets out what they do with regard to responsible investment ownership - also known as 'stewardship'. This typically relates to issues such as dialogue with companies and shareholder voting.
- ESG integration strategy Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. (These typically relate to improved risk management.)
- Combines norms based exclusions with other SRI criteria Find funds that make significant use of internationally agreed 'norms' (eg United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process ALONGSIDE additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.
- Combines ESG strategy with other SRI criteria Find funds that have an ESG strategy (which is typically focuses on avoiding companies that post environmental, social or governance related risks) with additional criteria such as positive and/or negative screens or engagement/stewardship strategies.
- 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.
- Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) 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.
- Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
- 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.
- Responsible Ownership/ESG a key differentiator The fund managers have said they consider this area to be a key differentiator for their business
- 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.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
- Boutique/specialist fund manager Find options offered by smaller, more specialist fund management companies with a significant (or entire) emphasis on sustainable, responsible, ethical, ESG or responsible ownership related investment strategies. Note - strategies vary significantly. Check fund manager supplied links for further information.
- Encourage board diversity eg gender Fund managers encourage the companies they invest in to have more diverse board structures (eg more women on boards)
- Use specialist ESG/SRI/sustainability research companies The company makes use of expert external research
- Full SRI policy information available on request Information on all selected filter options will be supplied by the fund manager if you ask them to do so
SRI / Ethical Policy
Troy's policy on Responsible Investment has a particular focus on the use of environmental, social and governance factors in Troy's research process, Troy's confirmation of its support for the principles of to the Stewardship code, the firm's policy on engagement and on (proxy) voting, and Troy's status as a signatory to the UN Principles for Responsible Investment.
The policy also references Troy's standalone policy on conflicts of interest.
Troy's Responsible Investment policy covers all assets managed by Troy Asset Management and is rooted in our long investment horizon and focus on capital preservation.
Troy's Responsible Investment Policy was implemented in 2017. The policy is intended to be broad enough to capture all assets managed by Troy Asset Management and has been approved by Troy's executive committee. The policy is reviewed on an annual basis.
The sole exception is the screening and exclusions policy which only currently applies to the assets managed within Troy's £77m Trojan Ethical Income Fund.
Resources, Affiliations & Corporate Strategies
Troy's CIO and Board have responsibility for oversight of Troy's responsible investment policies and objectives.
The portfolio manager of the Trojan Ethical Income Fund is responsible for the drafting of Troy's firm wide RI policies and objectives, with oversight from the CIO. He is also responsible for the implementation of Troy's RI policy and the associated systems, processes and training required to deliver Troy's responsible investment objectives.
The manager of the Trojan Ethical Income Fund is required to report to Troy's Board on an annual basis on the RI policy and its implementation.
The wider investment team (including all portfolio managers and analysts) have responsibility for the integration of ESG factors into their research and, alongside Troy's fund operations team, responsibilities for voting and engagement.
Troy has appointed VigeoEiris to support the screening process for the Trojan Ethical Income Fund and to provide additional ESG research capability on a subset of Troy's stocks. ISS have been appointed to provide Troy's proxy voting platform and proxy voting research as well as some broader ESG research. Lastly, Troy employed the services of the consultants Impactive Associates in 2017 in order provide support in the implementation of Troy's RI policy and to provide training to the investment team.