Earth Day 2023: Investing in our planet
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Artemis Positive Future
Artemis Positive Future is a global equity fund comprising a highly concentrated portfolio of growing companies, with a bias towards mid-caps. The four-strong team is looking for those firms making a material positive impact on the world through either environmental or social improvements. These companies will sit at the axis of technological and sustainable change, looking to disrupt old economies to capture market share. The fund will have a very different portfolio to its peers and to the wider market, aiming to find the best ideas earlier and hold them through their growth journey.
Our opinion
In an industry that is increasingly ESG-focused, Artemis Positive Future fund impressively stands out from the crowd. The mangers have an aspiration for it to be the best fund in the sector, with sustainable considerations as an enhancement to performance. Their focus on earlier stage mid-cap growth companies, in a concentrated portfolio is both differentiated and bold.
Company description
UK-based Artemis was founded in 1997 as a limited liability partnership. Affiliated Managers Group (AMG) and the management team at Artemis own 100% of the equity of the business. This is a financial partnership; AMG takes a share of the revenues produced by Artemis but does not get involved in the day-to-day running of the business. A recipient of the Elite Provider for Equities rating in 2015, 2016, 2017, 2018 and 2020, Artemis has retained its manager-centric, innovative and supportive culture, which has helped it to attract and retain talented investors.
Fund manager
Artemis Positive Future fund is co-managed by Craig Bonthron, Neil Goddin, Jonathan Parsons and Ryan Smith. The whole team joined Artemis from Aegon (formerly Kames) where they ran a similar fund.
Prior to Aegon, Craig worked at Scottish Widows on the global equities team. He was also previously a portfolio manager at Kleinwort Benson giving him almost 20 years of industry experience. He has a degree in Building Surveying and an MSc in Business IT Systems.
Neil Goddin joined Aegon in 2012 from LV Asset Management and had responsibility for the investment screens. He has previously worked for WestLB Mellon Asset Management and Deutsche Asset Management in various risk-management roles. He has 20 years’ industry experience.
Jonathan has specialised in positive impact funds since 2018. As well as Aegon’s Global Sustainable Equity fund he was also a co-manager on the North American Equity fund. He has a degree in Mathematics & Computing from Loughborough University.
Ryan Smith was Head of ESG Research at Kames before joining Artemis. He worked extensively on a range of ESG strategies - an area he has specialised in since 2000. Prior to this role he was completing his MSc and BSc.
Craig BonthronFund manager
Investment process
Artemis Positive Future fund is ambitious in its scope, aiming to be the best performing global fund through investing in companies making a transformative positive impact, and on the right side of structural change. The managers want to capture the rapid adoption of new industries as the world changes from old, obsolete industry to new sustainable technology.
This will be achieved through a disciplined and well-defined process, which starts with the elimination of certain industries and firms that do not fit with the philosophy of the fund. The team rules out companies with more than 10% of their revenues in alcohol, gambling or tobacco; weapons manufacturers and sellers; nuclear power companies; firms involved in animal testing, adult entertainment, genetic modification of agricultural products and fossil fuels extraction.
Next, they will start looking for companies creating a positive impact and that are in growing industries. The managers use a quantitative filter to look for those companies growing their revenues at an above market rate and remove those companies that are pre-revenue (though they will accept companies that are pre-profit). When considering the environmental impact of a company, the managers analyse the impact of the products and services it provides; its operational practices and standards; and its future positive impact or capacity for improvement.
The final portfolio will consist of just 35-45 holdings with weightings based on gaining the maximum impact from a stock, without adding undue correlation of similar factors or too much to risk. The team considers risk as being positioned in companies with long-term structural issues, rather than short term factors such as valuations or volatility. As such, the fund may be more volatile than the market at times.
ESG
ESG - Explicit
The aim of this fund is to invest in innovative companies that have a transformational, intentional positive impact, through either environmental or social improvements. The process starts with excluding those companies which have a clear negative impact, such as companies with more than 10% of their revenue derived from tobacco, alcohol or gambling, as well as those involved in animal testing, weapons and fossil fuel extraction. The managers then identify companies with an above-market revenue growth with the potential to have a positive impact, as well as material performance, resulting in a concentrated portfolio of companies offering products and services such as EV manufacturers, sustainable food, water & waste reduction and healthcare software. The team will engage with its portfolio companies, encouraging and facilitating positive practices and changes, ensuring each company makes that meaningful positive impact the managers are looking for.
The team has significant experience in positive impact investing, as well as wider industry experience.
Risk
The team considers risk as being positioned in companies with long-term structural issues, rather than short term factors such as valuations or volatility. As such, the Artemis Positive Future fund may be more volatile than the market at times. The fund has a natural mid-cap bias with typically more than 60% of the fund in companies classified as small and mid-sized on a global basis. The sustainable approach provides a further tilt to non-cyclical growth companies as it favours those that are tied into the long-term beneficiaries of changing consumer attitudes. This may mean the fund underperforms in a value rally.
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