Old Mutual Investment Group is expanding its responsible investment solutions with the launch of the Old Mutual Global ESG Equity Feeder Fund. The fund, managed by portfolio managers Fawaz Fakier and Maahir Jakoet, complements their full range of local and global funds, offering both index and active investment strategies.
The primary objective of the Old Mutual Global ESG Equity Feeder Fund is to achieve medium to long-term capital growth. It is designed to cater for investors seeking to diversify their portfolios with an international Environmental, Social, and Governance (ESG) equity component. While not Regulation 28-compliant, the fund is suitable for investors with a moderate-to-high risk appetite for equity investing and a time horizon greater than five years.
Portfolio Manager, Fawaz Fakier emphasises the fund's commitment to investing in quality companies that consistently generate returns above their business costs, creating real shareholder value. He also highlights the significance of companies rating in the top 20% in ESG scores among their peers, which helps mitigate controversies and accounting governance risk.
A recent report by the UK-based global industry body the Energy Institute shows record-high global energy sector carbon dioxide emissions in 2022, despite increased wind and solar deployment accounting for 84% of net electricity growth. Fakier stresses the importance of world economies staying focused on meeting the Paris Agreement targets. The fund's philosophy centers around investing in companies with lower carbon intensity, aligning with the Paris Agreement's environmental goals.
Portfolio Manager, Maahir Jakoet explains that the fund's investment universe consists of global top quintile ESG-rated stocks in the MSCI All Country World Index 600. These stocks have a climate target of 50% less than the benchmark, aligned with the Paris Agreement. The fund's ultimate goal is to exclusively hold ESG companies rated in the top 20%.
Recent advocacy by the head of the Principles of Responsible Investment (PRI) urges politicians and regulators to make International Sustainability Standards (ISSB) disclosures mandatory by 2025. This move aims to improve transparency for investors and asset managers, enabling better risk management within portfolios.
Jakoet emphasises that ESG investing is deeply ingrained in Old Mutual Investment Group's decision-making processes. While offering specialist ESG funds, the group ensures ESG integration across all investments, aiming to contribute not only to sustainable returns but also environmental sustainability, social cohesion, and sound governance as responsible stewards of their clients' assets.
Investors in the Old Mutual Global ESG Equity Feeder Fund will gain exposure to well-known companies such as Microsoft, Novo Nordisk, Adobe, Nutrien and Lloyds. The fund's sector allocation favours technology, financials, and materials while underweighting energy, consumer discretionary and staples.
Old Mutual Investment Group's commitment to responsible investment has earned them multiple awards over the years. Fakier humbly acknowledges these accolades, appreciating the recognition as pioneers and leaders in this emerging investment approach.
The domestic only Old Mutual ESG Equity Fund with similar ESG objectives now has a three-year track record. It had a difficult start, launching just after the Covid pandemic, at a time when Oil and Gas, Energy, and Resources were doing particularly well and ESG funds generally struggled across the globe. More recently, the fund has generated outperformance of 2.7% versus the Capped SWIX for the year ending June 2023, making it a top quartile performer over this period, clawing back almost all its underperformance in earlier years.
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