Fund Name | SRI Style | Product | Region | Asset Type | Launch Date | |
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Newton SRI Fund for Charities (BNY Mellon) | ESG Plus | Charities | Global | Mixed Asset | 17/05/2010 | |
Fund Size: £107.82m Total screened & themed / SRI assets: £3633.63 Total Responsible Ownership assets: £83318.10 Total assets under management: £83318.10 As at: 31/03/23 Contact: Ryan Grey, Sales - Intermediary (UK) ryan.grey@bnymellon.com |
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OverviewThe Fund aims to strike the balance between providing an investment solution focused on capital growth and income generation and being firmly aligned with SRI standards for charity investors. It aims to achieve a combination of capital growth and income through a multi–asset portfolio screened against SRI criteria. Our focus is very much on delivering attractive total returns for our clients – we recognize that ethical investors seek return, like any other investors. We aim to deliver that return within the constraints of a relevant and dynamic ethical policy which reflects the needs of
The SRI criteria for the Fund aims to meet the requirements of a broad range of charities and was established in response to feedback from our investors and other charities. The Fund is screened against a range of negative criteria, which are listed in the below given response to ESG policy.
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FiltersFund informationSustainabilityLimits exposure to carbon intensive industries Sustainability theme or focus UN Global Compact linked exclusion policy Sustainability focus Encourage more sustainable practices through stewardship Transition focus Climate Change & EnergyClimate change / greenhouse gas emissions policy Clean / renewable energy theme or focus Energy efficiency theme Require net zero action plan from all/most companies Paris aligned fund strategy Encourage transition to low carbon through stewardship activity Social / EmploymentFavours companies with strong social policies Ethical Values Led ExclusionsAnimal welfare policy Tobacco and related product manufacturers excluded Armaments manufacturers avoided Alcohol production excluded Gambling avoidance policy Pornography avoidance policy Civilian firearms production exclusion Governance & ManagementAvoids companies with poor governance Encourage board diversity e.g. gender UN sanctions exclusion Encourage higher ESG standards through stewardship activity Fund GovernanceESG integration strategy Asset Size & MetricsInvests in small, mid and large cap companies Invests mostly in large cap companies How The Fund WorksBalances company 'pros and cons' / best in sector Limited / few ethical exclusions* Positive selection bias ESG weighted / tilt SRI / ESG / Ethical policies explained on website Intended Clients & Product OptionsIntended for investors interested in sustainability Fund management company informationAbout The BusinessESG / SRI engagement (AFM company wide) Responsible ownership / stewardship policy or strategy (AFM company wide) Responsible ownership policy for non SRI funds (AFM company wide) Diversity, equality & inclusion engagement policy (AFM company wide) Vote all* shares at AGMs / EGMs (AFM company wide) Boutique / specialist fund management company Integrates ESG factors into all / most fund research In-house diversity improvement programme (AFM company wide) ResourcesIn-house responsible ownership / voting expertise Employ specialist ESG / SRI / sustainability researchers Use specialist ESG / SRI / sustainability research companies Collaborations & AffiliationsPRI signatory Climate Action 100+ or IIGCC member Fund EcoMarket partner TNFD forum member (AFM company wide) Investment Association (IA) member AccreditationsUK Stewardship Code signatory (AFM company wide) Engagement ApproachRegularly lead collaborative ESG initiatives (AFM company wide) Engaging on climate change issues Engaging with fossil fuel companies on climate change Engaging to reduce plastics pollution / waste Engaging to encourage responsible mining practices Engaging on biodiversity / nature issues Engaging on human rights issues Engaging on labour / employment issues Engaging on diversity, equality and / or inclusion issues Engaging on governance issues Engaging on responsible supply chain issues Engaging to encourage a Just Transition Company Wide ExclusionsControversial weapons avoidance policy (AFM company wide) Climate & Net Zero TransitionEncourage carbon / greenhouse gas reduction (AFM company wide) Net Zero commitment (AFM company wide) Working towards a ‘Net Zero’ commitment (AFM company wide) Carbon transition plan published (AFM company wide) Carbon offsetting - offset carbon as part of our net zero plan (AFM company wide) In-house carbon / GHG reduction policy (AFM company wide) Net Zero - have set a Net Zero target date (AFM company wide) Committed to SBTi / Science Based Targets Initiative TransparencyPublish full voting record (AFM company wide) Publish responsible ownership / stewardship report (AFM company wide) Full SRI policy information on company website Full SRI policy information available on request Net Zero transition plan publicly available (AFM company wide) |
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PolicyThe Fund leverages the Newton multi-dimensional process that integrates environmental, social and governance (ESG) matters into the selection of investments1. We select securities based on our assessment of their fundamental outlook and the valuation of their shares, guided by the longer-term perspective provided by our investment themes. These themes capture powerful transformational shifts across economies and industries which we believe are likely to shape investment opportunities and risks. We employ research analysts who are responsible for analysing companies within their respective areas of expertise on a global basis and for providing recommendations to our portfolio managers who are individually responsible for the decisions taken for each portfolio. Our portfolio managers construct single, directly invested portfolios. The Fund uses a performance benchmark2 of 75% equities, 20% bonds and 5% cash. We seek to outperform the performance benchmark by investing in attractively valued opportunities within that diversified universe. We believe the key attributes of the Fund are:
Other attributes of an investment may outweigh ESG considerations when making investment decisions. The way that material ESG considerations are assessed may vary depending on the asset class and strategy involved. As of September 2022, the research team performs ESG analysis on equity securities prior to their addition to Newton’s research recommended list (RRL). ESG reviews are not performed for all fixed income securities. The portfolio managers may purchase equity securities that are not included on the RRL and which do not have ESG reviews. Not all securities held by Newton’s strategies have an ESG review completed prior to investment.2From 1 October 2021, the Fund’s benchmark changed from a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% LIBID GBP 7 Day to a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% 7 day compounded SONIA. The Fund does not aim to replicate either the composition or the performance of the performance benchmark.
The SRI criteria for the Fund aims to meet the requirements of a broad range of charities and was established in response to feedback from our investors and other charities. The Fund is screened against a range of negative criteria, reflecting these areas of concern and interest for our charity investors. The full criteria are mentioned below:
Screening criteria is correct as of 26 August 2021. Newton may make changes to the above screens from time to time. Newton uses a third party vendor, Vigeo EIRIS, in order to apply the negative screening criteria to the Fund, apart from the anti-personnel landmine and cluster munitions screens. The negative screening criteria are based upon Vigeo EIRIS’ own definitions of each controversial activity/area of controversy and are implemented using Vigeo EIRIS’ in-house research. For the anti-personnel landmine and cluster munitions screens, Newton uses output from Sustainalytics to implement the screens.
PRI A+ rated (AFM Company Wide): We were rated A+ in 2020 but recently PRI has changed their types of ratings. Please refer to our latest scores are detailed on our website here: https://www.newtonim.com/uk-institutional/responsible-investment/
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ProcessConstructing the Newton SRI Fund for Charities The Fund aims to strike the balance between providing an investment solution focused on capital growth and income generation and being firmly aligned with SRI standards for charity investors. It aims to achieve a combination of capital growth and income through a multi–asset portfolio screened against SRI criteria. Our focus is very much on delivering attractive total returns for our clients – we recognize that ethical investors seek return, like any other investors. Where this Fund differs from non-screened funds is that we aim to deliver that return within the constraints of a relevant The SRI criteria for the Fund aims to meet the requirements of a broad range of charities and was established in response to feedback from our investors and other charities. The Fund is screened against a range of negative criteria, reflecting these areas of concern and interest for our charity investors. The full criteria are mentioned below:
Screening criteria is correct as of 26 August 2021. Newton may make changes to the above screens from time to time. Newton uses a third party vendor, Vigeo EIRIS, in order to apply the negative screening criteria to the Fund, apart from the anti-personnel landmine and cluster munitions screens. The negative screening criteria are based upon Vigeo EIRIS’ own definitions of each controversial activity/area of controversy and are implemented using Vigeo EIRIS’ in-house research. For the anti-personnel landmine and cluster munitions screens, Newton uses output from Sustainalytics to implement the screens.
The portfolio managers draw upon the output of our proprietary global research team as well as conduct their own research to ensure that the portfolio is composed of securities in which they have strong conviction*. The portfolio managers have a broad and diversified universe of equities, bonds and listed vehicles from which to construct the Fund. The ethical screens exclude approximately 15% of the investible universe, although this varies by region. The global nature of the Fund minimizes the impact of this constricted universe and provides an ample opportunity set from which to deliver attractive returns.
* There is no compulsion for portfolio managers to purchase recommended ideas, and portfolio managers may choose to invest in securities that are not on the research recommended list (RRL).
Buy discipline The decision to buy the security rests with the lead portfolio manager. This is dictated by the manager’s conviction in the investment idea along with the risk/reward characteristics of the security as well as how it will impact the overall portfolio. The skill of the portfolio manager is in selecting the best combination of securities in the right proportion with the aim of delivering the best risk-weighted return from the portfolio. The aim is to create a diversified portfolio of active positions. Positions are sized by:
Securities will be sold if they no longer conform to our SRI ethical criteria or if our view on the fundamentals and valuation changes. If a security falls out of the investable universe, it must be sold within three months to maintain the ethical rigour of the portfolio but at the same time to avoid a ‘forced sale’ at an inopportune time. Changes in the fundamentals of a company, such as a change in management or acquisitions, etc., would prompt the portfolio manager to reassess a company's rating. We aim to invest for the medium to long term; however, securities may be sold for the following reasons:
Newton’s investment team employs a straight-forward and transparent approach to ethical investment on behalf of our clients and pooled fund investors. We partner with charities to ensure that we understand their specific needs and desired outcomes. We monitor the evolving ethical landscape for trends in ethical investing and develop the Fund’s strategy to align with these trends. We aim to ensure that the Fund’s policy is relevant and dynamic for all the unit holders in the Fund, that it continues to provide adequate coverage and can be implemented effectively. Our process leverages the expertise and resources of Newton’s broader investment team. We construct portfolios using a fundamental, security selection process driven by themes and taking account of key ESG factors*. Our detailed analysis provides valuable insight into what a company does (activities/industry) and how it does it (management/governance). It is this detailed understanding of the companies we invest in which also provides a level of risk management within the investment process. We make direct investments in securities, resulting in greater transparency and knowledge of the portfolio at a deeper level to provide our investors with confidence that the ethical policy is being implemented effectively. All investment decisions are predicated on two key factors: 1) an investment’s eligibility based on the ethical policy; and 2) the requirement for attractive valuation and upside potential. We would never purchase a security simply for its ethical/ESG credentials, as we believe maximizing returns and delivery of the Fund’s investment objectives is key. NIM is able to implement a client’s ethical policy using both sectoral-based exclusions and ethical threshold-based exclusions. A sectoral-based exclusion will effectively exclude any company within a given sector, whereas a threshold-based exclusion will look-through to a company’s revenues to identify earnings from the respective activity. In both cases, compliance with the client’s ethical policy are monitored through NIM’s order management system (OMS). Sector exclusions are implemented directly into NIM’s OMS using industry classifications from the major market data providers. We use the expertise of specialist, market leading data providers to facilitate the provision of ethical threshold-based screens. NIM’s main provider of ethical threshold-based screens is Moody’s ESG Solutions (formerly Vigeo EIRIS), but we also retain access to supplementary screens provided by Sustainalytics and MSCI. We ensure that our data providers are reviewed on a regular basis. For ethical threshold-based exclusions NIM will create an ethical strategy within Moody’s ESG Solutions online platform (DataLab) in line with the respective client/fund’s ethical requirements, choosing from a suite of screens provided by the vendor. The ethical strategy is compared to Moody’s research universe and will then produce a list of companies that are not permitted under the screens selected. The resultant security list is downloaded into NIM’s OMS and can then be used to prevent the purchase of non-compliant companies, as well as flag any holdings that become “restricted”. Security lists are downloaded into NIM’s OMS from DataLab on a weekly basis. The integrity of the ethical screens implemented on behalf of our clients/funds and the respective portfolio’s adherence to them is fundamental to our approach as ethical investors and ensures our clients have confidence that we are investing only in those areas deemed investible under the client/fund’s ethical policy. Output from the provider systems in the form of a security list is fed into NIM’s OMS and therefore any attempt to buy a stock that is unacceptable, or where an existing portfolio position becomes un-investible, a warning is triggered, alerting the portfolio manager (PM), the client team and NIM’s investment control (IC) team to this fact. IC will raise the alert with the PM and NIM’s investment relationship management (IRM) team and will ask the PM to take the appropriate action:
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Resources, Affiliations & Corporate Strategies |
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DialshifterOur organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by… NIM became a signatory to the Net Zero Asset Managers Initiative in March 2021. We have published details of our approach here: https://www.newtonim.com/uk-institutional/insights/net-zero/. We seek to meet these headline targets via a range of transparent measures around investments in climate ‘solution providers’, engagement with fossil-fuel to support their energy transition and advocating for supportive government and industry regulation.
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LiteratureINFORMATION Past performance is not a guide to future performance.
Issued in UK by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Assets under management (AUM) relates to the combined assets managed by the Newton Investment Management group. From 1 September 2021, Newton group of companies includes Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA). For a full list of risks applicable to this Fund, please refer to the Prospectus or other offering documents. Please refer to the prospectus and the KID/ KIID before making any investment decisions. Documents are available in English and an official language of the jurisdictions in which the Fund is registered for public sale. Go to www.bnymellon.com. Benchmark: The Fund will measure its performance against a composite index, comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% SONIA (7-day compounded), as a comparator benchmark (the ‘Benchmark’). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of the asset classes, sectors and geographical areas in which the Fund predominantly invests. The Fund is actively managed, which means the Investment Manager has absolute discretion to invest outside the Benchmark subject to the investment objective and policies disclosed in the Prospectus. While the Fund’s holdings may include constituents of the Benchmark, the selection of investments and their weightings in the portfolio are not influenced by the Benchmark. The investment strategy does not restrict the extent to which the Investment Manager may deviate from the Benchmark. The Newton SRI Fund for Charities is a unit trust authorized by the Financial Conduct Authority as a non-UCITS retail scheme and is operated by BNY Mellon Fund Managers Limited (BNY MFM). Returns may increase or decrease as a result of currency fluctuations. Costs incurred when purchasing, holding, converting or selling any investment, will impact returns. Costs may increase or decrease as a result of currency and exchange rate fluctuations.
A complete description of risk factors is set out in the Prospectus in the section entitled "Risk Factors". Last amended: 08/08/23 10:37 |
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04/30/2024