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BMO Responsible Global Equity
BMO Responsible Global Equity fund invests in quality growth companies from across the world, with a focus on sustainability. There tends to be a bias towards medium-sized companies. Managers Jamie Jenkins and Nick Henderson are stock-pickers with a long-term approach, and they have the help of an independent sustainability team to ensure standards are maintained and backed-up by strong engagement with company management post-investment.
Our opinion
What makes this fund stand out from the crowd is the strength of the responsible investing team: it is a separate unit of BMO, meaning bespoke analysis which is truly independent. The fund's process is also very thorough, with in-depth customised analysis of companies, making for very considered stock selection. The risk management of position sizes means it is not the highest conviction strategy, but the concentration still makes it an active core global equities fund, with a robust sustainable approach.
Company description
Founded as the Bank of Montreal some 200 years ago, BMO is one of the big five banks in Canada. It is ranked fourth by market capitalisation and assets, and is also one of the ten largest banks in North America, providing a broad range of financial services to more than 12 million customers globally. It acquired F&C in 2014 and was awarded the Elite Provider for Equities rating in 2019.
Fund manager
BMO Responsible Global Equity fund has two managers: Jamie Jenkins and Nick Henderson. Jamie is the lead manager, while Nick is a portfolio manager in the global equities team and the alternate manager on the fund. Jamie has 22 years experience, 20 of which have been spent at BMO. Before joining the company, he worked at Hill Samuel Asset Management as a Japanese equities fund manager. He has an MA in History from the University of Edinburgh. Nick has 11 years experience - all at BMO. He is a CFA Charterholder and has a degree in Economics from Bristol University.
Investing responsibly does not limit the potential of your money, rather it empowers investors to do the right thing and embrace opportunities for growth.
Jamie JenkinsFund manager
Investment process
BMO Responsible Global Equity fund will avoid companies with unsustainable business practices; but will invest in companies where there are problems that can be resolved. Holdings will predominantly be from developed markets, as the governance scores from emerging market companies don't quite meet the required criteria at this time.
Initial idea generation will come from company meetings, research around sector thematics, conferences and dedicated ESG analysis. These ideas are then put through the ESG screening process, administered by BMO's responsible investment team. Any contentious issues will be escalated to an advisory group to ensure holdings do not breach the investment guidelines of the BMO Responsible Global Equity fund.
The constraints include; no alcohol, gambling, pornography, weapons or tobacco, and the fund is fossil fuel free. There are also restrictions on environmental impact (with particular consideration to the Arctic & ecologically-sensitive operations), animal welfare, human rights and labour standards. This leaves an investable universe of around 1,000 stocks.
The investment team will analyse each company and a standardised research report is written for each stock, allowing for quick comparisons between holdings and easy dissemination of research amongst analysts. There will also be an ESG tear sheet to allow the team to revisit the ESG story and ensure it still holds true. After this, the team will either meet, or have a conference call, with the management teams of potential investments. At this point, Jamie and Nick will take control of portfolio construction.
ESG
ESG - Explicit
BMO considers ESG a fundamental element of the investment process of this fund. The responsible investment philosophy is based on three pillars: Avoid – avoid companies with damaging or unsustainable business practices; Invest – invest in companies that make a positive contribution to society and the environment; Improve – use influence as an investor to encourage best practice management of ESG issues through engagement and voting. All stocks considered for investment first undergo screening by members of the Responsible Investment team, to determine if they meet the criteria for inclusion in the portfolio’s investable universe. The global equities team then considers ESG factors directly in the analysis of the business model and in the assessment of management quality, with the fund manager making the ultimate decision. The managers operate an active ownership policy regarding the stocks in which they invest, seeking to influence positive change and support best practice through engagement and voting.
Risk
The construction of the final portfolio is the primary element of risk management. In order to limit stock-specific risk, position sizes will not vary greatly. There is a soft limit on country weights that is +/- 10% that of the benchmark. A dedicated risk team monitor risks in the fund. The BMO Responsible Global Equity fund may underperform the benchmark at times, especially when commodity-related stocks are doing well.
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