This £407.67m fund is run by Mike Fox with the aim of delivering a “strong investment performance” through investing in companies that make a positive contribution to society.
The manager clarifies: “In terms of the positive contributions to society, that breaks down into two areas. One is companies with products or services that have a social benefit to them.
“The second one is companies that lead their industries in environmental, social and governance (ESG) management. They can be areas not typically associated with sustainable funds but because they lead their industries in the way they manage themselves, we think they do make a positive contribution to society.”
Armaments and tobacco companies are the only sectors excluded by the fund.
The fund launched in 1990 and originally had a negative screening process. Mr Fox explains: “The current [positive screening] investment process was embedded in the fund in 2003. That’s when we made the switch from ethical to sustainable.
“There are still some negative screens but it’s more about finding companies that have a positive element to them rather than excluding companies that have a negative element to them.”
He points out that companies in healthcare, technology or infrastructure tend to offer products or services that are deemed to have some social benefit.
When it comes to finding “industry leaders” in ESG management, he describes it as a ranking exercise. Says the manager: “The process there is that we will look at an industry, we will look at the companies in it, we will look at their ESG policies and performance, and we will take a view as to whether we think that is what we describe as industry leading.
“Then within those industries, providing they don’t do anything on the other side that contravenes any other principles of the fund, we will look to invest.”
Those companies are then put to an external advisory committee before they get in the investable universe. After that, it is a traditional fund management approach, according to Mr Fox. “It’s looking at each investment from a financial perspective and understanding which ones we think are going to deliver the best performance,” he notes.
Turning to macroeconomic factors, he adds: “The fund will evolve through market and economic cycles, there’s no doubt about that.
“But healthcare and technology don’t become less interesting in terms of the way the fund is structured or how we screen companies. We might just have a different weighting in those areas depending on what we perceive the macro environment to be.”
The fund sits towards the riskier end of a risk reward profile at level five out of a possible seven, while the ongoing charge is 1.53 per cent.
FE Analytics shows that this fund has produced a consistently top quartile performance in the IMA UK All Companies sector across all time periods. In the 10 years to November 4, it delivered a respectable 156.13 per cent return, against the sector average of 107.45 per cent. Over three years, the fund generated a return of 61.69 per cent, outperforming the sector average of 40.78 per cent.