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The Responsible Global Equities Team in BMO Global Asset Management manage the Friends First Stewardship Ethical Fund. They seek to actively invest in companies that stand to benefit from or substantially contribute to trends in sustainable development while avoiding investment in companies with damaging or unsustainable business practice.
Sustainable investing has continued to gain traction in the investment industry over recent years. Embedding environmental, social and governance (ESG) factors in capital markets makes good business sense and leads to more sustainable markets and better outcomes for societies.
BMO Global Asset Managers focus on encouraging companies to address strategic issues including ESG factors with a view to reducing risk and supporting long-term performance. They build partnerships with the companies using constructive confidential dialogue. They typically work one-to-one with the companies held in stock but taking a collaborative approach where this has more impact. 53 companies held in the fund (making up 90% of the fund weight) were engaged in 2017.
Kerry Group is an Ireland-based world leader in food ingredients and formulations, and is exposed to global trends in nutrition, health and wellness, and the shift to “clean-labelling”.
Whilst these are clear societal positives there is limited disclosure on environmental supply chain management, and it is this area that now forms the core of the engagement activities with Kerry Group.
A closer look at the forces that have driven sustainable investing over the past decade suggests the trend will continue. Technology and the rise of transparency are here to stay. Gathering and processing data will become increasingly standardised and less expensive. Environmental changes, in particular climate change, will put a growing premium on good stewardship and fossil fuel free practices as natural assets will appreciate in value over time. Since February 2016, the fund has avoided fossil fuels companies and has also sold two companies that sat in high-emission sectors. Finally, people everywhere are increasingly empowered by technology. ESG investing allows them to express their own values and to ensure that their savings and investments reflect their preferences, without compromising on returns.
BMO Global Asset Managers believe their responsible approach can enhance returns and reduce risks for those invested in the fund. The fund managers aim to deliver top-quartile returns and be a leader in specialist, global ESG investing. Launched in 1997, the fund is one of the longest established ethical funds in the market and has shown a strong performance and high returns.
Graph Source: Friends First, 18/9/2018. Returns quoted are net of fees.
The Stewardship Ethical Fund is available across the Friends First suite of Pensions, Approved Retirement Funds (ARFs), Approved Minimum Retirement Funds (AMRFs), Savings and Investment products.
This article is for Financial Broker use only.
The funds referred to on this page may be linked to an insurance-based investment product and the Key Information Document (KID) for this product is available at www.friendsfirst.ie/kids. The Risk Ratings of the funds referred to in this document differ from the corresponding Summary Risk Indicators shown in the KID. An explanation of the differences between the Risk Rating and the Summary Risk Indicator is available at the location above.
Warning: If you invest in this product, you may lose some or all of the money you invest.
Warning: Past performance is not a reliable guide to future performance.
Warning: The value of your investment can go down as well as up.
Warning: Funds may be affected by changes in currency exchange rates.