The fund is run by the former Lloyd George Management investment team, which was a specialist emerging markets boutique acquired by BMO in 2011 (who also bought F&C in 2014).
After the team select initial ideas, the dedicated 13-strong sustainability team will score a company according to their six positive themes. These are largely focused on the enfranchisement of people and society in developing economies (e.g. low income consumers, sustainable finance and infrastructure development). After investing, the team will engage with companies to improve policies and performance.
The team look for companies with a long-term growth investment thesis, and they expect to hold companies for more than 5 years. Given the long-term approach, the managers are focused on stock selection, with quality management teams and steady growth stories expected to fill the flexible portfolio. Stocks will be sold if they observe a deterioration of quality, look overvalued, or have ESG related concerns.
We like the fund as it combines a solid, repeatable sustainability process with EM-specialist stock pickers. The focus on quality has resulted in a significantly better downside profile since the new management team began managing the fund, and the weighting to compelling themes in emerging markets results in significant potential for growth as well as social good.