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Fund Name(s):
  • King & Shaxson Ethical Model Portfolios (multiple)
Fund Name SRI Style Product Region Asset Type Launch Date
King & Shaxson Ethical Model Portfolios (multiple) Ethical DFM/Portfolio Global Mixed Asset 01/11/2002

Fund Size: £230.00m

Total screened & themed / SRI assets: £280.00

Total Responsible Ownership assets: £280.00

Total assets under management: £280.00

As at: 31/08/23

Contact: ethical@kasl.co.uk

Overview

We have been managing ethical portfolios since 2002, meaning we understand the importance of adhering to a negative and positive screen. Over this time, clients have increasingly wanted to go beyond avoidance. We therefore seek investments which are providing solutions to many of the social and environmental challenges we face, from climate change to access to affordable healthcare.

 

The ethical & ESG screening process is as important to us as the financial investment process. We ensure that each investment meets clients' expectations, as we look beyond data gimmicks and simple 'tick box' practices.

 

For bespoke portfolios, the screen is supplied by the client, whereas for model portfolios, it is clearly laid out in the documentation. This combination of filtering out the harmful and including the investments with a positive impact on society or the environment, has served our clients well for over 20 years.

Filters

Fund information

Sustainability

Environmental policy

Limits exposure to carbon intensive industries

Sustainable transport policy or theme

Sustainability theme or focus

Environmental damage and pollution policy

Waste management policy or theme

Favours cleaner, greener companies

Encourage more sustainable practices through stewardship

Circular economy theme

Nature & Biodiversity

Biodiversity / nature policy

Nature / biodiversity based solutions theme

Climate Change & Energy

Nuclear exclusion policy

Coal, oil & / or gas majors excluded

Invests in clean energy / renewables

Fracking and tar sands excluded

Arctic drilling exclusion

Fossil fuel reserves exclusion

Energy efficiency theme

Fossil fuel exploration exclusion - direct involvement

Targeted Positive Investments

Invests >25% of fund in environmental/social solutions companies

Human Rights

Human rights policy

Oppressive regimes (not free or democratic) exclusion policy

Social / Employment

Social policy

Labour standards policy

Favours companies with strong social policies

Meeting Peoples' Basic Needs

Invests in social property (freehold)

Demographic / ageing population theme

Invests > 5% in social bonds

Invests > 5% in social housing

Green infrastructure focus

Responsible food production or agriculture theme

Healthcare / medical theme

Ethical Values Led Exclusions

Ethical policies

Tobacco and related product manufacturers excluded

Armaments manufacturers avoided

Alcohol production excluded

Gambling avoidance policy

Pornography avoidance policy

Animal testing - excluded except if for medical purposes

Civilian firearms production exclusion

Banking & Financials

Predatory lending exclusion

Exclude banks with significant fossil fuel investments

Governance & Management

Avoids companies with poor governance

UN sanctions exclusion

Fund Governance

ESG integration strategy

Asset Size & Metrics

Invests in small, mid and large cap companies

Invest in supranationals

How The Fund Works

Strictly screened ethical fund

Positive selection bias

Significant harm exclusion

SRI / ESG / Ethical policies explained on website

Different risk options of this strategy are available

Participated in sustainability solutions IPOs or new issuances

Impact Methodologies

Aims to generate positive impacts (or 'outcomes')

Invests in environmental solutions companies

Invests in social solutions companies

Invests in sustainability / ESG disruptors

Intended Clients & Product Options

Intended for investors interested in sustainability

Intended for clients who want to have a positive impact

Available via an ISA (OEIC only)

Portfolio SRI / ESG options available (DFMs)

Multiple SRI / ESG portfolio options available (DFMs)

Bespoke SRI / ESG portfolios available (DFMs)

Fund management company information

About The Business

Boutique / specialist fund management company

Integrates ESG factors into all / most fund research

SDG aligned aims / objectives (AFM company wide)

Invests in newly listed companies (AFM company wide)

Resources

Use specialist ESG / SRI / sustainability research companies

ESG specialists on all investment desks (AFM company wide)

Collaborations & Affiliations

UKSIF member

Company Wide Exclusions

Review(ing)carbon / fossil fuel exposure for all funds (AFM company wide)

Controversial weapons avoidance policy (AFM company wide)

Tobacco avoidance policy (AFM company wide)

Fossil fuel exclusion policy (AFM company wide)

Climate & Net Zero Transition

Working towards a ‘Net Zero’ commitment (AFM company wide)

Transparency

Full SRI policy information on company website

Policy

The method we use to screen investments includes both a process driven quantitative and values-based qualitative approach (more of which is covered below). It is important to note that quantitative ESG data serves the process but does not drive it. Recent examples where a company has received a high third party ESG score, but has subsequently been affected by ESG flags, shows the importance of our internal research to avoid these pitfalls.

 

For our model portfolios, we have implemented a stringent negative and positive screen to meet the vast majority of investor's concerns (where ethics are more specific, a bespoke portfolio may be required). We pride ourselves on ensuring that each portfolio is constructed to be as 'ethical' as possible within the investment constraints of each portfolio and platform. Whilst all funds have a specific label, whether that's Responsible, ESG or Impact, we look beyond this to understand each funds approach. This includes conducting ongoing screening of funds where we look 'under the bonnet' at the underlying holdings to ensure they still align with the screen in place. We regularly communicate with fund managers for justifications on holdings, before investing into new funds, and during the time they are held. At times we may exit holdings if we feel the justification from a fund manager is not sufficient, or a company conducts activity that is against the negative screen in place. Funds are preferred if they demonstrate that a rigorous screen is in place, our ongoing due diligence ensures this is monitored. On top of the negative screen, we favour funds which also have a positive investment focus. Many of the fund houses who appear in our model portfolios will have explicit policies on issues such as climate change, greenhouse gas emissions, and responsible ownership/stewardship.

 

Negative Screen:

Adult Entertainment, Aggressive Tax Practices, Alcohol, Armaments, Fossil Fuels, Gambling, Human rights abuse, Illegal deforestation, Intensive farming, Nuclear, Poor environmental management, Tobacco

 

Positive Screen:

Education & Learning, Environmental Efficiency, Healthcare, Sustainable Infrastructure, Microfinance, Public Transport, Renewable Energy, Resource Management, Social & Medical Property, Sustainable forestry, Water & Sanitation.

 

Process

The screening policy for our model portfolios clearly lays out the areas of avoidance and inclusion. We follow a traditional negative screen, which we have built on to include other topical issues such as Nuclear and Fossil Fuels. On top of this, our screening policy lays out a number of positive investment themes we tilt towards, focusing on solutions to environmental and social issues.

 

 Our screening process has two parts: a quantitative screen and a more values based qualitative screen.

 

The quantitative ESG screen will examine the investment from an ESG perspective, with the data provided by third party screeners (currently MSCI). We are able to gain data on a number of ESG factors, including the investments exposure to a number of positive investment themes, which have obvious similarities with the United Nation’s Sustainable Development Goals. The research will also flag business involvement that may be contrary to any negative screen we have in place. Whilst the quantitative output we receive is valuable, it does not drive our investment decision, and is by no means definitive.

 

The bulk of our research into an investment is through our in-house qualitative screen. This ensures we truly understand the  investment and motives around it, and draws on a wide range of sources. This includes meeting fund managers and analysts and challenging them on their investment philosophy so we can truly understand how they implement their own sustainable strategy. The key for us is screening each collective, to ensure the underlying companies adhere to our own screening policy. We challenge holdings when we feel there are questions on their merits, and will sell out of a fund if not convinced. It is important to note, we will not compromise on ethics for performance, nor will we compromise on performance for ethics. Where we have doubts, we will always err on the side of caution.

 

Resources, Affiliations & Corporate Strategies

Having run personal ethical portfolios since 2002, we have a vast understanding of the market place. As a result, the majority of our research is conducted in house through the portfolio managers and wider team. This ensures investment decisions and ethical considerations go hand in hand.  

 

We are able to gain access to third party data from MSCI, which alone will not be definitive, whilst also relying on reports and research from industry bodies and charities.

 

Through the group, we have access to a number of analysts, including those in the Far East who are increasingly considering ESG factors in their own process. We are a member of the UK Sustainable Investment and Finance Association.

Literature

Disclaimer

Please remember that the value of investments and the income arising from them may fall as well as rise and is not guaranteed. All information contained in this document has been prepared by King & Shaxson Asset Management. All opinions and estimates constitute our judgement as of the date of publication and do not constitute general or specific investment advice. Nothing in this document constitutes an offer to buy or sell securities of any type or should be construed as an offer or the solicitation of an offer to purchase or subscribe or sell any investment or to engage in any other transaction. The information contained in this document is for general information purposes only and should not be considered a personal recommendation or specific investment advice. King and Shaxson Asset Management Ltd.(Reg. No. 3870667) has its registered office at 155 Fenchurch Street, London, EC3M 6AL. The Company is registered in England and Wales and is part of the PhillipCapital Group. King and Shaxson Asset Management Ltd. (FCA Reg. No. 823315) is authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.

Last amended: 31/01/24 07:03

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05/08/2024