Investment objective
To provide long-term capital appreciation with a diversified and actively managed portfolio of US sustainable equities without any specific restriction on tracking error. The sub-fund will use a selection of securities complying with Environmental, Social and Governance (ESG) responsibility criteria. The portfolio will be composed of issuers that are either leading in ESG best-practise or attractive due to their progression in ESG and seeks to invest in a portfolio of companies with potential for strong financial returns that help build a positive future for all.
Investment policy
The sub-fund promotes environmental and social characteristics and qualifies as product in accordance with article 8(1) of Regulation (EU) 2019/2088 on sustainability related disclosures in the financial services sector.
The sub-fund invests predominantly in transferable equity securities such as equities, other equity shares such as cooperative shares and participation certificates issued by, or warrants on transferable equity securities of, companies which are domiciled in or exercise the predominant part of their economic activity in North America.
The investible unverse is reduced by at least 20% due the implementation of sustainability criteria.
The sub-fund seek to invest in companies whose products, services, or practices help provide solutions to climate change and renew the earth, as well as companies that help advance for all equality with social mobility, respect for human rights, and wellbeing(addressed through 3 thematics pillars : climate change – Inclusion& Human rights – health & community well-being)
In that respect, the external investment manager has set up the following process:
- Top-down sector research to identify the leading practices and companies in each sector.
- Bottom-up research that integrates comprehensive ESG criteria with financial research to identify Sustainable companies and companies with positive ESG trajectory where the potential engagement can boost the company even further.
The ESG team of the external investment company presents its analysis of the material issues in each sector, highlighting emerging issues, best in class practices, risks, and opportunities. Its detailed research provides comparative information about the companies within each industry and sector And identify companies and activities not allowed for investment.
Thus, the sub-fund should comply with the exclusion rules of the Management Company applying to article 8 investment products. Next to that, the external Portfolio manager is aiming to avoid investing in companies primarily engaged in the extraction exploration, production, manufacturing or refining of fossil fuels but may may invest in companies that use fossil fuel-based energy as an input within their operations or that distribute fossil fuels. The external investment manager will not invest in companies that derive more than 5% of their revenue from alcoholic beverages.
The ESG Sector reports of the Investment portfolio managers are based on ranking companies and identifying leader companies vs. key ESG risks, opportunities, and solutions products. This data allows the financial analysts to identify companies with the strongest ESG characteristics and exposure to revenue from solutions (impact, exposure to the UNSDG) products and services, incorporating their financial analysis, they create a focus list from which they build a portfolio.
Companies must pass both the financial and ESG analysis before they can be included in the smaller universe of names the external investment manager would consider for purchase.
Thus, the sub-fund will be composed of companies that are categorized by the External Investment Manager either as ” Solutions leaders “, or as “ESG leaders”, or as “ESG momentum” or as “Solutions Exposure” .
ESG methodology : the mainsustainability indicators used in that approach are (the list is not exhaustive) :
Human rights and equity/mobility: Employement practices, education and skills promotion, microinance etc.
Wellness and wellbeing: safe products, nutritious products, organic foods, clean water, clean air etc.
Climate change and earth renewal: carbon net zero by 2050 target, renewable energy solutions etc.
The Extenal investment Manage’sr in-house ESG team evaluates the environmental, social and governance opportunities and risks for a given company and versus select peers through a rigorous process that integrates information from numerous and disparate sources, including: company filings, trade journals, industry reports, and news and legal databases.The in-house ESG research is strengthened by consulting third party ESG data providers.
The extra- financial analysis covered 100% of the portfolio (cash is not covered by the ESG analysis).
The ESG coverage depends of reported informations from companies and constrained by companies disclosures. An unavailable informations would impact the abilitiy to do proper ESG research.
The minimum asset allocation in such securities on a consolidated basis (direct and indirect investments through the use of derivative instruments) will be of 60% of the sub-fund's net assets. Moreover, the minimum sub-fund’s investment in equity securities will be of 75% of the sub-fund's net assets.
The sub-fund may invest up to 10% in ADR/GDR and may also hold on an ancillary basis cash and cash equivalents including certificates of deposit and short-term deposits.
The sub-fund may also hold on an ancillary basis cash and cash equivalents including certificates of deposit and shortterm deposits.
The sub-fund may invest for maximum 10% of its net assets in funds that have been selected in accordance with a number of qualitative and quantitative criteria. The qualitative analysis assesses the stability and strength of the investment manager, as well as its investment process and philosophy. The quantitative selection process aims to select only funds with proven risk-adjusted performance.
The instruments described below are not covered by the ESG analysis.
The sub-fund may also invest in debt securities (such as fixed and floating rate bonds, Money Market Instruments, including High Yield bonds) up to 10% of its net assets, in particular for cash management purposes.
The sub-fund may invest up to 10% of its net assets in derivative instruments and other financial instruments as described in Appendix 2 of the full prospectus for investment, efficient portfolio management or hedging purposes.
This sub-fund is actively managed and is compared to the risk benchmark as described in Appendix 2 for performance and risk level indicator purposes. However, the reference to this index does not constitute any objective or limitation in the management and composition of the portfolio and the sub-fund does not restrain its universe to the index components.
The index does not evaluate or include its constituents on the basis of environmental and/or social characteristics and is therefore not aligned with the ESG characteristics promoted by the sub-fund.
Therefore, returns may deviate materially from the performance of the reference index.
