ISA season 2020: Funds to shake up your investment portfolio
“They always say time changes things, but you actually have to change them yourself.” The words of...
Rathbone Global Sustainability
This is a high conviction global equity fund that can invest in companies of any size, but will have a bias towards mid-caps. Manager David Harrison focuses on selecting stocks with strong cash generation, but will actively avoid businesses involved in unethical or unsustainable practices. The exclusion criteria included are alcohol, animal testing, armaments, extraction of fossil fuels, gambling, nuclear power, pornography, tobacco and poor employment, environment and/or human rights practices. Each holding will also have to have at least one positive environmental, social or governance attribute.
Our opinion
Since joining Rathbones, David has worked closely with Carl Stick, manager of Rathbone Income fund, whom we rate very highly. The investment process for this fund will be very similar to that used by Carl's income team and, in addition, will engage the help of Rathbone Greenbank Investments - a dedicated ethical and sustainable investment division that already provides screening services for Rathbone Ethical Bond fund. Given the process is used by two Elite Rated funds and should be transferable, and the manager has extensive experience in sustainable investing, we think this fund, launched in July 2018, is one to watch.
Company description
Established in 1999, Rathbone Unit Trust Management is the asset management subsidiary of Rathbone Brothers Plc. It was awarded the Elite Equities Provider Rating in 2016, 2017 and 2018. Rathbone Brothers Plc is listed on the London Stock Exchange and employs more than 250 investment professionals in a number of offices around the UK.
Fund manager
David Harrison has been at Rathbones since 2014. He has over 18 years investment experience, having previously worked at Julius Baer where he was a global equity analyst. He has also had roles at Hermes and Goldman Sachs. David has also worked for the Norwegian Pension Fund, where he helped implement their ethical investment mandate and has a wealth of experience in the environmental, social and governance space.
You can aim to not only invest profitably over the years, but to do so in a way that minimises costs to the planet and society.
David HarrisonFund manager
Investment process
The process aims to highlight cash generative companies with durable franchises. David will start by reviewing quality and value screens, as well as gathering ideas from company meetings with current and prospective holdings. From these ideas, David will perform fundamental analysis on a company's financials to assess where cash flow returns come from, how capital is allocated and provide a valuation.
He will be helped by Rathbone Greenbank Investments, a dedicated ethical and sustainable investment division that provides screening services. David will give them his stock ideas and they will test the company to see if it passes muster. This process has worked exceptionally well with the Rathbone Ethical bond fund and the company believe this can be successfully replicated in an equity fund. Companies in areas such as alcohol, oil and gas extraction, tobacco and gambling will be excluded, and positive factors, including good employment practices, or a product or service that solves environmental challenges, will be identified.
These positive factors are linked to the UN's Sustainable Development Goals and at least one will need to be met to allow a prospective holding to be purchased. The ultimate portfolio will have invest in around 30-50 stocks. Approximately a quarter is likely to be invested in medium-sized companies, which David believes to be a ‘sweet spot’. This is because company management are more engaged and you can find lots of previously undiscovered ideas.
While there is no income target for this new fund, its investment approach is likely to produce a natural yield of around 2%.
Risk
Due to the negative screening undertaken in the process, the fund will avoid entire sectors, which means its performance can differ quite significantly from its benchmark. Its bias to medium-sized companies could also increase volatility at times.
Read more about this fund
10 companies doing good for employees, customers and investors
The world today is increasingly interconnected. Companies can no longer connect only with investors...
A millennial’s guide to responsible investing
It’s no secret I favour responsible and sustainable investing. But with so much jargon and...
The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.