Why we recommend it
The team is led by Mike Fox who has been part of the sustainable team since its formation in 2003. Shalin Shah, who has been with the fixed income team since 2008 took over from Richard Nelson on the fixed income side in October 2020 when he stepped away from the sustainable range. George Crowdy and Sebastian Beguelin joined the team in 2020 before becoming comanagers in April 2021. They work alongside Fox on the equity side and were brought in, in part to reflect the team's desire to widen the investment universe outside of the UK and also to acknowledge the significant increase in assets.
Fox is head of sustainability and looks to invest in companies that deliver a net benefit to society in terms of the products and services they provide, or which show leadership in environmental, social, and governance (ESG) management on the equities side. On the fixed-income side, Shah looks for similar characteristics, but secured bonds make up the core and are complemented by issuers that are currently out of favour but where he can see clear credit migration catalysts.
The equity portion of the portfolio will typically comprise 40-50 names with top 10 holdings making up the lion’s share. Although the manager can invest across the market-cap spectrum, since 2009 he has had a consistent large-cap bias in the belief that bigger companies with their resources are better placed to address sustainability issues that society faces while still being able to generate good long-term returns for shareholders. The tendency has been to have 65%-75% in equities. Fox has a bias towards UK equities, but he can invest up to 50% in overseas companies. Currency is typically left unhedged on the equity side. On the fixed-income side the bias is towards sterling-denominated bonds, but there can be up 15% in non-sterling bonds.
The fund is a strong choice for investors looking for modest income and capital growth from a portfolio centred around bonds, with some exposure to equities, using a sustainability approach that has been used in a disciplined manner over time. Fox and Shah are experienced investors and are supported by an experienced and respected team that is well-versed in the sustainable process employed here. They also leverage wider teams at Royal London.
ii ACE sustainable style: Considers. This means the fund carefully considers an often wide range of ethical and/ or environmental, social and governance (ESG) issues or themes when balancing positive and negative factors.
Fund EcoMarket category: Sustainability Focused. This relates to funds that focus on sustainability related issues and opportunities as part of their investment strategy, often alongside ethical criteria. Their focus is often around longer term societal and environmental trends.
|Information and data compiled October 2023.
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