Duncan Goodwin
Manager of the Premier Miton Global Sustainable Fund range
Tell us about why these funds were launched?
We launched our Global Sustainable Fund Range three years ago with positive outcomes for investors front and centre. The holdings in the funds offer a better ESG (Environmental, social, governance) quality score, lower carbon intensity and increased levels of female leadership against a traditional non-ESG comparator.
Tell us a little about the process behind these funds.
The Global Sustainable Fund Range is built on a process that puts ESG factors first. Our global sustainable funds are underpinned by the breadth and depth of our research resources, our data-driven insight, and the scale and reach of our investment stewardship programme.
The investment philosophy and process is a simple one. The way companies manage ESG factors affects not only their financial results but the long-term viability of our environment and way of life. Businesses offering sustainable products and services the world needs are well positioned to potentially capture future consumption trends.
And on to the process, how does this capture ESG factors?
Since the two funds – Premier Miton Global Sustainable Growth and Premier Miton Global Sustainable Optimum Income – changed their mandate in 2020 to focus on sustainable investing they have been grounded in a simple and repeatable process. We are looking for companies that want to drive and benefit from a positive social or environmental change. We invest in companies that aim to help solve social or environment problems, as well as generating a financial return.
ESG has attracted a lot of investment headlines, it is a broad and growing area – how do you break it down?
We use ESG themes strongly and an important part of this is to recognise when new themes are emerging, as you mentioned it is a broad and growing investment area. Within the funds we currently have seven core ESG themes:
- Financial inclusion: defined by the outcome of individuals and businesses having access to useful and affordable financial products and services that meet their needs; transactions, payments, savings, credit and insurance – all delivered in a responsible and sustainable way.
- Health & wellbeing: here we look for business leaders investing in the resilience and well-being of their workers, paying particular attention to issues that affect the health, community, economic stability, education.
- Energy transition: this is typified by the global energy sector’s shift from fossil-based systems of energy production and consumption, including oil, natural gas and coal, to renewable energy sources like wind and solar, as well as lithium-ion batteries.
- Infrastructure: The transition to a low-carbon economy is estimated by the United Nations Principles for Responsible Investment to need at least US$7 trillion annually. Much of this would be for upgraded and new global infrastructure, particularly infrastructure to support alternative or renewable energy distribution and ’green cities.’
- Food productivity & safety: ESG factors have become increasingly important in the food and beverage industry as businesses come under investor scrutiny and face mounting pressure from environmentally and socially conscious consumers, increased legislation and reputational risks.
- Circular economy: A circular economy is a model of production and consumption that tackles global challenges, such as climate change, biodiversity loss, waste, and pollution, by circulating products and materials.
- Education: The aim here is to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
Looking to next year there are a couple of themes we have been tracking but not yet invested in, digital transformation and water. Both meet criteria of a clear positive impact to society and clear alignment with sustainable development goals.
What does ESG offer an investor looking to achieve a wealth management goal?
Our investment conviction is that ESG-integrated portfolios can provide better risk-adjusted returns to investors over the long-term, and that ESG-related data provides an increasingly important set of tools to identify unpriced risks and investment opportunities.
ESG measures help inform the due diligence, portfolio construction, and monitoring processes of our Premier Miton Global Sustainable Growth and Premier Miton Global Sustainable Optimum Income funds, as well as our approach to risk management.
Finally, why would an investor consider Premier Miton’s Global Sustainable Funds?
We believe there are several features that differentiate Premier Miton’s Global Sustainable Funds and they should be part of any adviser-client conversation around the funds.
The funds are currently investing in seven themes. There is no overriding exposure to one sector. The funds are not tech funds, green energy funds or healthcare funds. In a volatile and potentially directionless market, we believe breadth and diversity of an investment solution is going to be key.
We have an investment thread within the funds focused on small, innovative and potentially high growth companies. We believe that these companies have the potential to change and disrupt industries and have a positive impact on both fund performance and society.
Finally, within a market context, during these periods of change and pivots of direction, this may be a period where an active approach to fund management can really pay dividends.
With these funds, advisers should feel confident talking to their clients about the strategy of investing globally, with a sustainable focus, being the correct approach. From the acceleration in the adoption of alternative energy, the reshoring of supply chains or the need for improved business efficiency, the long-term trends on which the funds are based are aligned in our view with the need of governments, businesses, people and the planet.
