Sustainable Real Return is an actively managed, unconstrained, global multi-asset strategy which aims to deliver a minimum return of cash (one-month sterling LIBOR) +4% per annum over 5 years before fees. In doing so, it aims to achieve a positive return on a rolling 3-year basis. However, a positive return is not guaranteed and a capital loss may occur.
The strategy invests in securities that both have durable financial and competitive positions and manage positively the material impacts of their operations and products on the environment and society. It avoids securities with material unresolvable environmental, social and governance (ESG) risks which are likely to negatively affect future performance, and does not invest in the securities of any company that derives more than 10% of its turnover from the production and sale of tobacco.
- Seeks to achieve its objective with reduced volatility through security selection, asset-type flexibility and an emphasis on capital preservation
- Uses ESG analysis to positively identify companies with robust business models which effectively incorporate sustainability into their core business and strategy
- Sustainable ‘red lines’ ensure the poorest-performing companies are not eligible for investment, such as companies which violate the UN Global Compact Principles of sustainable corporate performance. Companies which we think are incompatible with the aim of limiting global warming to 2°C
are also excluded
- Engaging with companies where ESG issues are resolvable and can be improved, and reporting on that activity
Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.
Key investment risks
- Objective/performance risk: There is no guarantee that the strategy will achieve its objectives.
- Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
- Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
- Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.
- Credit ratings and unrated securities risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.
- Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.
- Emerging-markets risk: Emerging markets have additional risks due to less developed market practices.
- Liquidity risk: The strategy may not always find another party willing to purchase an asset that the strategy wants to sell which could impact the strategy’s ability to sell the asset or to sell the asset at its current value.
- Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.
- Sustainable strategies risk: The strategy follows a sustainable investment approach, which may cause it to perform differently than strategies that have a similar objective but which do not integrate sustainable investment criteria when selecting securities. The strategy will not engage in stock lending activities and, therefore, may forego any additional returns that may be produced through such activities.