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Why we recommend it
Mike Fox has managed the strategy since November 2003, initially at the Co-operative Group until its acquisition by Royal London Asset Management in July 2013, making him one of the longest-tenured UK manages within the sustainable investment space. George Crowdy and Sebastien Beguelin who joined the group in 2020 support him as co-managers, along with four dedicated analysts. They are also supported by the broader investment team, which includes ESG specialists.
The fund’s aim is to invest in companies that deliver a net benefit to society in terms of the products and services they provide or that show leadership in environmental, social and governance management. The ESG approach is designed to be flexible and in line with a longer-term growth mindset. Fox primarily seeks to identify long-term growth opportunities that are underappreciated by the market, based on the belief that markets incorrectly fade long-term growth rates in certain circumstances. The team conducts 'cash flow return on investment' analysis in order to understand value creation and what is already implied in current valuations.
The fund shows a natural growth bias versus the FTSE All-Share Index. This search for growth is reflected in the manager’s willingness to include off-benchmark overseas names (up to 20%) in the fund. Success has been seen over longer time periods, but the biases in the approach can be detrimental when other factors drive markets such as in 2022.
Overall, Fox has applied the long-term approach consistently and to great success. The fund’s socially responsible objectives and longer-term growth approach do, however, limit exposure to certain sectors and companies, which may result in a return profile that differs markedly from that of the index and peers from time-to-time.
The fund is reasonably priced: The ‘C’ accumulation share class levies annual ongoing charges of 0.76%.
ii ACE ethical 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 Themed. 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.
Ethical screening: In certain market conditions the performance of the fund may differ significantly from others in the peer group that do not exclude specific sectors or companies from a comparable investment universe.
Portfolio concentration: The fund has a concentrated portfolio compared with the UK FTSE All-Share index. The portfolio typically holds around 40 stocks.
|Information and data compiled to March 2023.|
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