Do good, avoid bad, make money 3D Investing An Overview About John - - PowerPoint PPT Presentation

Do good, avoid bad, make money

About John Fleetwood

2 Do good, avoid bad, make money 3D Investing – An Overview

Financial adviser 1991 – 2004 Ethical specialist, founded Ethical Investment Association, author of several guides to ethical investment Development Manager, King & Shaxson 2004– 12 Developed ethical discretionary management services for asset manager 3D Investing 2013 – present Founder of 3D Investing, provision of SRI stock research to King & Shaxson & Smith & Williamson

Do Good – Maximise Social Impact

3 Do good, avoid bad, make money

54% of Brits who hold investments, a record high, want their pensions or savings to have some positive impact on the world beyond just making money*

3D Investing – An Overview

Avoid bad – Minimise ethical compromise

Almost a third (32%) of all adults want a fossil free option for their savings

• r investments, rising to 46% among under-35s*

Make money – meet financial expectations

Predictability and not losing money is more important than chasing the highest return * YouGov October 2015

Purpose

4 Do good, avoid bad, make money

To move more money into investments that actually make a social or environmental difference

3D Investing – An Overview

Solutions

Model portfolios, star rating , research tools

Markets

Asset managers, advisers and individuals

Why 3D Investing – Practical solutions

5 Do good, avoid bad, make money 3D Investing – An Overview

Problem Solution

Non core for advisers & asset managers Model portfolios and support to make it easy and cost effective to run SRI portfolios Perceived lack of impact of ethical funds as a whole Easy identification of those funds that do make an impact Lack of practical, simple tools to identify best funds 3D Star rating Ethical criteria can be misleading Transparent profiling - Identification of potential issues Lack of critical analysis Objective comparison of fund content

Fund Impact: Sheep or goats?

6 Do good, avoid bad, make money

“We also use positive screening, where we favour companies that are involved in activities that benefit the environment or society” 6% of fund invested in companies providing social or environmental solutions.*

3D Investing – An Overview

“The fund aim is to ... invest in companies contributing to social well being and the protection and wise use of the natural environment.“ 40.6% of fund invested in companies providing social or environmental solutions.*

* 3D Investing analysis of portfolios of leading ethical UK equity funds

Avoiding the ‘bads’

7 Do good, avoid bad, make money 3D Investing – An Overview

Holdings include Petrofac (oil), Rio Tinto (mining controversies), Aeroinventory (aerospace)*

* 3D Investing analysis of portfolio of a leading ethical UK equity fund

“The fund looks to produce long term capital growth by mainly investing in the shares of UK companies whose business is based on ethical, or socially responsible principles, both in the UK and

• verseas”

Fund Portfolio Analysis

8 Do good, avoid bad, make money 3D Investing – An Overview

Ethical acceptability

Banks, tax avoidance, fossil fuels, mining, supply chains, boycotts Take care – fund contains stocks that are likely to be of concern to investors Widely acceptable for the majority of investors Check – there may be ethical issues for some investors

3D classification

Little ethical merit, best of class, solutions based

Making Money – real return that reliably meets objectives

9 Do good, avoid bad, make money 3D Investing – An Overview

* 3D Investing analysis ast at 31 August 2015

3D Star Rating – an independent answer to the question “What are the good SRI funds”

10 Do good, avoid bad, make money 3D Investing – An Overview

"At last a powerful and mercifully easy to use online tool that allows me to find the best sustainable, responsible and ethical options for my clients! – Financial adviser

What determines the Star Rating?

11 Do good, avoid bad, make money 3D Investing – An Overview

Social Impact – Percentage of the portfolio invested in solutions to social and environmental challenges SRI Capability – Ability to assess sustainability and ethical issues, and the quality of the sustainability strategy and its implementation Financial Performance – Performance relative to the benchmark for the sector, absolute performance and consistency Ethical Acceptability – exposure to stocks that may be of ethical concern to investors

What does a 3D Star Rating Mean?

12 Do good, avoid bad, make money 3D Investing – An Overview Avoid - Funds contain stocks that totally undermine our confidence in the fund or have persistent very poor performance or may be in danger of being closed Watch - Low social impact and the fund contains some stocks that may be of concern or has a high social impact or high SRI capability, but a poor financial track record Good- Decent social impact but with weaknesses in suitability , SRI Management

• r performance; or high SRI capability but some ethical concerns; or high impact

and low exposure to controversial stocks compared to other funds in sector Leader-High social impact but weak SRI capability or some limited issues in stock selection ; or decent social impact with excellent SRI management Pioneer-High social impact, fair performance and lack of exposure to companies that may be of ethical concern

3D Portfolio Universe – leaders in sector

13 Do good, avoid bad, make money 3D Investing – An Overview

10 20 30 40 50 60 70 80 Alliance Trust SF UK Growth Alliance Trust UK Ethical Eden Tree Amity UK Equity Henderson Global Care Income Jupiter Responsible Income Kames Ethical Equity Standard Life UK Ethical Equity F&C Responsible UK Income F&C Responsible UK Equity Premier Ethical % of Portfolio

Best of Sector Solutions

3D Portfolios for Advisors & Managers

14 Do good, avoid bad, make money 3D Investing – An Overview

Ethical/Sustainable Environmental Clean Energy Social Property Healthcare Microfinance Other

UK Equity Global Equity Specialist Equity Emerging Markets Equity Fixed Interest Microfinance Infrastructure Real Estate Mixed Asset

3D Investing - Partners

15 Do good, avoid bad, make money 3D Investing – An Overview

Do good, avoid bad, make money