03 Dec 2020
Every month we study the universe of funds in the investment marketplace to assess whether they meet our exacting standards and should be given the RSMR seal of approval.
The Royal London Sustainable Leaders Trust has been deploying the same process over the long term and has a very well-resourced internal team. Although the manager is Head of Sustainable Investment at RLAM, it is very much a team approach with the process at the centre of the team and each member feeding into this process. The proprietary intellectual property of the team is fundamental to the process, although third party research is utilised by the team. However, the team are not dictated by third party research as it is more a yard stick for them to use to demonstrate their alpha.
In addition to UK equities, the portfolio does contain exposure to global equities with typically eight holdings constituting this exposure. The global positions are used to offset areas that are excluded from the fund due to the process, as well as providing exposure to industries where there is no UK equivalent.
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The Troy Trojan Ethical fund forms part of the multi-asset offering from Troy that also includes Troy Trojan and Personal Assets Trust. As per Troy Trojan and Personal Assets Trust, the aim of the fund is capital preservation whilst also growing capital over the longer term.
The investment process is the same as Troy Trojan and Personal Assets Trust with the only difference being the application of a negative ethics-based screen to the existing portfolio that screens out areas such as tobacco, alcohol and high interest rate lending. Due to this, the only areas where Trojan Ethical fund should significantly deviate from Troy Trojan in terms of underlying equities, is the screen. Even then, this will predominantly be in the tobacco and alcohol stocks.
Government debt exposure is limited to G7 nations only (Canada, France, Germany, Italy, Japan, UK and US). In addition, the fund will not invest in the securities of any sovereign issuer which is subject to a sanction issued by either the United Nations or the European Union. For precious metals, only exchange traded commodities (ETC) products that can be audited are held to ascertain that underlying gold has been sourced in compliance with the London Bullion Market Associations Responsible Gold Guidance.
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The trust invests in a concentrated portfolio of between 35 and 65 stocks selected for their potential to grow relative to the FTSE All-Share Index. The managers, Iain McCrombie and Milena Mileva, are focused on UK companies with large growth opportunities, entrenched competitive positions, and ambitious, well-aligned management teams. Stock selection is driven by long-term fundamentals. The managers have produced strong returns through a disciplined focus, based on finding high quality growth companies within the small to mid-cap segment of the market.
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The Merian Chrysalis will provide investors with access to the returns available from investing in later-stage, private companies with long-term growth potential, an investment class that has traditionally been difficult to access for individual investors. The managers, Richard Watts and Nick Williamson, believe that later-stage, private companies offer opportunities to generate significant returns for investors and have built a concentrated portfolio of between 10 and 15 stocks. The team at Merian has an excellent reputation and has demonstrated impressive stock picking skills in managing UK mid-cap and smaller company funds and has experience of investing in this area of the market.
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This information is for UK Professional Advisers only and should not be given to retail clients.The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
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