Our ESG journey continues…

E.I. Sturdza Strategic Management Limited (“Eric Sturdza Investments”) is an independent investment fund company with a proven track record of offering high conviction, award-winning strategies to institutional and private clients globally. As a multi-boutique provider of investment funds, we offer European, Chinese, Japanese and Global equities, as well as a global flexible allocation fund and a global total return fixed income strategy.

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6 Apr 2021

E.I. Sturdza Strategic Management Limited (“Eric Sturdza Investments”) is an independent investment fund company with a proven track record of offering high conviction, award-winning strategies to institutional and private clients globally. As a multi-boutique provider of investment funds, we offer European, Chinese, Japanese and Global equities, as well as a global flexible allocation fund and a global total return fixed income strategy.

Our purpose is to establish and manage a range of specialist investment funds and portfolios each designed to exceed investors’ expectations regarding investments in a particular market, asset class or investment type. Our business model is to work with specialist dedicated investment advisory firms or teams that we believe are amongst the best in their field to offer investors access to class-leading investment products supported by institutional-quality risk management frameworks and controls independent from the portfolio management teams.

“We believe managing wealth is not a business, it is a profession. We grow as the reward for a craft that we perform with integrity, expertise and passion. We believe in long-term value creation by investing in quality companies with attractive business models and valuations. Faithful to the Eric Sturdza Group’s entrepreneurial culture, we continue to attract talent and develop new partnerships with financial specialists for the benefit of our investors.”

We provide alpha-generating investment managers with the framework to independently and exclusively focus on managing portfolios, whilst giving investors peace of mind by over-laying the autonomous investment teams with rigorous risk management and compliance oversight. We want the portfolio teams to focus exclusively on managing money totally independently, free from any constraining “house view” on economics and market conditions, whilst benefiting from a robust UCITS compliant structure, providing access to markets with speed and ease.

Our ESG journey

Like everything in today’s world, the ESG landscape continues to evolve at an unprecedented pace. The COVID-19 pandemic acted as a further accelerant in this regard, solidifying the focus of investors, regulators and the asset management industry on the need to fully embed Environmental, Social and Governance metrics as key components in the investment processes of all industry participants. It is widely acknowledged today that products considering such “non-financial” factors are more resilient from a performance and risk perspective.

PwC noted in their November 2020 presentation “2022: The growth opportunity of the century”:

“ESG products become more resilient in performance and will, after full implementation of the Sustainable Finance framework, protect better against downside risk linked to sustainability.”

We are very mindful of the global issues that we face today and our obligation to take whatever action we can to address these issues. As an Investment Manager, we believe we have the opportunity to actively contribute through the investment decisions we make, allocating money to those companies that are able to demonstrate strong environmental, social and governance (ESG) credentials, or those that are actively transitioning their business to ensure ESG considerations are fully integrated within their investment processes.

UN PRI LogoWe believe that responsible investment is best embodied by the UN-supported Principles for Responsible Investment (PRI). To confirm our approach to responsible investing, we are a signatory to the PRI and are committed to its six guiding principles. Our Responsible Investment Process consists of two key pillars; exclusions and ESG Integration.

Firstly, we perform a negative screen on potential investment opportunities; seeking to exclude investments in product areas that we do not wish to finance; this leads to the exclusion of companies involved in controversial weapons and tobacco products for example. Secondly, we require our investment teams to fully integrate ESG considerations into their investment processes. Full details regarding our ESG Approach are available here.

„We are committed to ensuring that we offer our investors access to innovative investment ideas, within a framework that seeks to achieve better environmental, societal and governance outcomes.“

Ultimately, we are committed to ensuring that we offer our investors access to innovative investment ideas, within a framework that seeks to achieve better environmental, societal and governance outcomes. To this end, and in accordance with the Sustainable Finance Disclosure Regulation (EU) 2019/2088 (‘SFDR’), we are pleased to advise that all sub-funds of E.I. Sturdza Funds plc are now classified as Article 8 funds.

SFDR Article 8 Compliant

As an active Investment Manager, commonly investing with a long-term view in a concentrated portfolio of holdings, we are often able to develop relationships with the companies in which we invest, engaging directly with company representatives and developing an in-depth understanding of a Company’s strategic ambitions, including their ESG position and aspirations.

Such an understanding allows us to allocate capital to those companies that have strong ESG credentials, or those that are transitioning their business to fully integrate ESG considerations.

We fundamentally believe that the strength of a company’s governance, along with its environmental and social sustainability is central to its ability to deliver long-term growth. Accordingly, such considerations are incorporated within the research process prior to any investment being made. This review helps to identify any ESG risks which may be best addressed through direct engagement with the target company. The engagement with investee companies is undertaken by the Investment Advisers we work with and by utilising research from third party specialist companies.

To ensure the Investment Advisers have access to relevant insights in this regard, we have engaged Sustainalytics, who provide ESG risks analysis and research. Sustainalytics categorises risks across five levels, from negligible to severe, with detailed analysis of each environmental, social and governance risk at a company level. Research obtained via external data providers such as Sustainalytics forms part of the initial and ongoing monitoring of potential and existing portfolio holdings. Responsibility for this sits with the investment advisory teams; however, is subject to oversight by our ESG committee, which consists of senior representatives from across the business. The research obtained from external data providers, as well as proprietary research undertaken by our investment teams, is fully incorporated as part of the ongoing engagement with investee companies.

“We use our voting rights to promote best practices, good corporate governance and socially responsible investing principles and fully endorse and support the principles on engagement as set out in the Shareholder Rights Directive II (EU) 2017/828 (SRDII).”

We strive to be active owners and recognise the power of proxy voting and our obligation to actively participate and contribute to decision-making processes through voting. We use our voting rights to promote best practices, good corporate governance and socially responsible investing principles. As such we aim to vote on all proxies and have therefore engaged Institutional Shareholder Services Inc (“ISS”), a leading third-party provider, to benefit from their experience, extensive research capabilities and voting administration services. Our Shareholder Engagement Policy sets out how we ensure stewardship and shareholder engagement is central in all we do when acting as Investment Manager to our funds. We fully endorse and support the principles on engagement as set out in the Shareholder Rights Directive II (EU) 2017/828 (“SRDII”).

Information on the investment approach that is being adopted with respect to sustainability and non-financial criteria can be obtained from Annex I of the relevant sub-fund’s supplement available from our Literature Library.

“In line with the French AMF requirements we will ensure that our funds have a higher average ESG risk rating than the average ESG rating of their universe and exceed established coverage thresholds.”

Further, and to comply with requirements issued by the French authorities (AMF position DOC-2020-03), not only will we ensure that our funds have a higher average ESG risk rating than the average ESG risk rating of their respective universes, but we will also ensure that the proportion of the Fund’s portfolio with an ESG rating is higher than:

  • 90% for equities issued by large capitalisation companies whose registered office is located in developed countries, debt securities and money market instruments with an investment-grade credit rating, or sovereign debt issued by developed countries;
  • 75% for equities issued by large capitalisation companies whose registered office is located in emerging countries, equities issued by small and medium capitalisation companies, debt securities and money market instruments with a high yield credit rating or sovereign debt issued by emerging countries.

We recognise the importance of the evolution in ESG initiatives and strive to ensure we meet our obligations, whether these be client, business or moral obligations, today and in the future. We also recognise that we are still in the early stages of this journey and are committed to evolving our business and infrastructure as necessary to deliver on our objective of providing our investors access to innovative investment ideas, within a framework that seeks to achieve better environmental, societal and governance outcomes.

Whilst our recent focus has been on the development of our infrastructure to ensure the Investment Advisers are well-positioned to adhere to SFDR, we are also actively working in the background to enhance the reporting we will provide to our stakeholders regarding ESG factors associated with our funds. Work in this regard continues.

Adam Turberville, Director

Adam Turberville, Director of Eric Sturdza Investments commented: “Environmental, Social and Governance (ESG) issues are very important to all of us at Eric Sturdza Investments and we are pleased with the progress we have made to date on our ESG journey, including achieving an Article 8 designation for all our UCITS funds under the European Sustainable Finance Disclosure Regulation (SFDR).“

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Eric Sturdza Investments plants 115,000 trees

Being mindful of the global issues that we face today and our obligation to take steps whenever possible to address these we have elected to work with the Eden Reforestation Projects (“Eden”) since 2020, resulting in the planting of 115,000 trees.

Eden’s work seeks to address a number of issues caused by deforestation. Deforestation is a global phenomenon caused by a variety of factors. These factors range from large-scale slash and burn practices, to unsustainable agriculture, to daily community forest destruction.

Regions that are most impacted by deforestation are commonly poverty-stricken and underdeveloped areas. With few options to support their families, often, members of impoverished communities are forced to destroy their local environment to survive, cutting down trees for construction, fuel, heat, and agricultural purposes. While this solves a short-term problem, long-term consequences arise when forests are cut down and not restored. The impact of deforestation is dramatic, causing severe flooding, erosion, and desertification, resulting in even worse long-term environmental issues.

Eden’s approach to tackling deforestation has two key elements; engagement with local communities and funding. Since Eden’s establishment in 2005, over 443 million trees have been planted, and, as a result of consistent employment, Eden’s employees are now sending their children to school and are able to afford food, clothing, and medical care. Eden has active projects in Nepal, Madagascar, Haiti, Indonesia, Mozambique and Kenya, and has recently expanded its work into Central America. Their work has a myriad of benefits, both from an environmental and human perspective.

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Our initial donation to Eden led to the planting of 50,000 trees in 2020, our commitment has been reinforced in 2021 and will result in the planting of an additional 65,000 trees. The money will be used by Eden and invested where it is needed most across all of their project nations.

We are delighted and proud to be able to support Eden in their efforts to find sustainable and long-term solutions that seek to address the environmental and human impacts caused by deforestation globally, becoming a Sapling Partner in 2021.

Learn more about the Eden Reforestation Projects at edenprojects.org.

Eric Sturdza Investments Industry Recognitions

The quality of our Team and the Independent Portfolio Managers with whom we work has recently been recognised with Eric Sturdza Investments being named the ‚UK’s Best Boutique Fund Manager‘ in CFI’s Asset Management Awards, ‘Asset Management Company of the Year, Switzerland 2020’ courtesy of the Global Banking & Finance Awards® and two of our UCITS funds being recognised as ‚Top Performers‘ in the 2021 Investors Choice Awards, having outperformed their peer group in 2020. This marks the fourth time in five years that Eric Sturdza Investments has been recognised in the Investors Choice Awards and the first time that two different funds have received Top Performer accolades in the same year.

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Andrew Fish, Managing Director at Eric Sturdza Investments commented: “We are delighted to receive the recognition from these prestigious awards, which is testament to the hard work and effective investment approach of our portfolio teams, and confirms our commitment to bringing clients the very best investment ideas in a way that combines performance with sustainability”.

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The Strategic European Silver Stars Fund was recognised as a Top Performer in the ‚Best Fund under $100m – Equity‘ category, after delivering an annual return in 2020 of 27%, while the Strategic China Panda Fund’s 23% return led to its recognition as a Top Performer in the ‚Asia Pacific Equity Fund‘ category.

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“Last year really proved the value of fundamental investing, and we are very pleased that our strategy has delivered such strong returns for our clients,” said Bertrand Faure, Portfolio Manager of the Strategic European Silver Stars Fund. “Looking ahead, we have reshuffled the portfolio and are confident that 2021 will remain a favourable investment environment for fundamental strategies. We are already seeing some outstanding opportunities in Europe that combine low valuations with sharp earnings growth and free cash flow generation prospects for several years.”
 

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“The Chinese growth story continues to be a key driver of the global economy, and our belief in the value of a long-term, capital appreciation-focused investment strategy in this market remains strong,” said Lilian Co, Portfolio Manager of the Strategic China Panda Fund. “As the first of the major economies to fully recover from the pandemic, evidenced in its positive GDP growth for 2020, China has already had a very strong start to 2021, with the new economy and internet stocks, in particular, driving bullish sentiment.”

To be recognised as a Top Performer in the awards, hosted by fund intelligence platform Allocator, a fund must have delivered a return of at least 20% in the preceding year and be among the top performers in their peer group.

As always, we invite investors and prospective investors, to get in touch if you require further information regarding our ESG approach, Funds, business philosophy and investment ideas.

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Adam Turberville
Director
+44 1481 742380
a.turberville@ericsturdza.com

 

 

 

The views and statements contained herein are those of E.I. Sturdza Strategic Management Limited as Investment Manager and Global Distributor of the EI Sturdza Funds Plc, Bertrand Faure of Pascal Investment Advisers SA as Investment Adviser to the E.I Sturdza Strategic European Silver Stars Fund and Lilian Co of LBN Advisers Limited as Investment Adviser to the E.I. Sturdza Strategic China Panda as of March 2020 and are based on internal research and modelling. This does not constitute independent research and under no circumstances should the information contained therein be used as a recommendation to buy or sell any security or shares of the funds or financial instrument or service or to pursue any investment product or strategy or otherwise engage in any investment activity or as an expression of an opinion as to the present or future value of any security or financial instrument. Nothing contained in the views and statements by Pascal Investment Advisers SA and LBN Advisers Limited is intended to constitute legal, tax, securities or investment advice. The views, projections, forecasts or related statements and statements contain “forward-looking statements”. Although Pascal Investment Advisers SA and LBN Advisers Limited believe that the expectations are reasonable, no assurance is given that such expectations will prove to be correct, and such forward-looking statements should not be regarded as a guarantee, prediction or definitive statement of fact or probability.

Investment involves risk. The value of investments, the funds and the income which may be generated from them can go down as well as up and therefore investors must be able to bear the risks of a substantial impairment or loss of their entire investments. Past performance is no guarantee of future results.

This communication is issued by E.I. Sturdza Funds Plc, registered for distribution in Austria, Belgium, Bulgaria, Finland, France, Germany, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom.  The Fund has appointed E.I. Sturdza Strategic Management Limited, as investment manager and global distributor and is regulated by the Guernsey Financial Services Commission and registered under Company Number: 35985.  E.I. Sturdza Funds plc and its sub-funds are Irish funds authorised by the Central Bank of Ireland. The funds are approved for distribution in Switzerland by Finma. The Swiss representative and the paying agent is Banque Eric Sturdza SA, rue du Rhône 112, 1204 Geneva, Switzerland. The prospectus, KIIDs, Articles of association, semi-annual and annual reports of E.I. Sturdza Funds Plc can be obtained, free of charges, at the seat of the Swiss representative. The funds are also approved for distribution in the United Kingdom. This content is approved for issue in the United Kingdom to professional investors by E.I. Sturdza Investments Limited, Claridge House, 32 Davies Street, London, W1K 4ND which is an appointed representative of Mirabella Advisers LLP which is authorised and regulated by the Financial Conduct Authority. The information contained herein is estimated, unaudited and may be subject to change.

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