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 Worldwide Sustainability

Worldwide Sustainability

An unconstrained investment strategy that invests in companies across the world which are positioned to contribute to, and benefit from, sustainable development.

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This information is a financial promotion for the Stewart Investors Worldwide Sustainability Strategy intended for retail and professional clients in the UK only.

Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency risk: the Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund and could create losses. Currency control decisions made by governments could affect the value of the Fund's investments and could cause the Fund to defer or suspend redemptions of its shares.
  • Emerging market risk: Emerging markets tend to be more sensitive to economic and political conditions than developed markets. Other factors include greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.

Where featured, specific securities or companies are intended as an illustration of investment strategy only, and should not be construed as investment advice or a recommendation to buy or sell any security.

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document.

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Our Worldwide Sustainability strategy was launched in November 2012. It is an unconstrained investment strategy, by which we mean it is not restricted to certain countries, and is able to invest in between 40-60 companies all over the world. As with all of our strategies, we are interested in finding only the very best businesses; those with high quality management teams, franchises, and financials, that are well positioned to contribute to, and benefit from, sustainable development.

Strategy highlights: a focus on quality and sustainability

  • Companies must contribute to sustainable development and make a net-positive impact to a more sustainable future. Portfolio Explorer >

  • We invest in high-quality companies with exceptional cultures, strong franchises and resilient financials. How we pick companies >

  • We avoid companies linked to harmful activities and engage and vote for positive change. Our position on harmful products >

  • Our approach is long-term, bottom-up, high conviction and benchmark agnostic

  • We focus on capital preservation as well as capital growth – we define risk as the permanent loss of client capital

Latest insights

Q3 2022

Worldwide Sustainability strategy update: 1 July - 30 September 2022

Generally speaking, over the past quarter, a few high-level points are becoming clear. It seems that macro-economic and company-specific data and commentary continues to raise alarm bells and that the volume of geopolitical noise rises unabated. A final observation is that financial fundamentals are not yet being rewarded by the market which continues to focus on oil and gas: the only sector to post positive returns so far this year.

In terms of how we are responding to this challenging investment backdrop, we have initiated two new positions in familiar companies. Roche (Switzerland: Health Care) is a high-quality and well-stewarded pharmaceutical and diagnostic company at attractive valuations and Markel (United States: Financials) is a high-quality insurance company which is also reasonably valued. Both should provide fundamental support in the portfolio via strong financials and robust franchises.

We have also added to other resilient franchises such as the well-run Finnish telco Elisa (Finland: Communication Services), retailer Jerónimo Martins (Portugal: Consumer Staples), home and personal care supplier Beiersdorf (Germany: Consumer Staples) and a strong Asian consumer company, Unicharm (Japan: Consumer Staples), among others.

At the same time, we have trimmed higher-valued and somewhat cyclical positions in Nemetschek (Germany: Information Technology), Veeva Systems (United States: Health Care), Tomra (Norway: Industrials), Synopsys (United States: Information Technology), MonotaRO (Japan: Industrials), Nordson (United States: Industrials) and Alfen (Netherlands: Industrials), among others.

We have not divested any holdings this quarter and we believe the aforementioned changes leave the portfolio in a more robust position.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q2 2022

Worldwide Sustainability strategy update: 1 April - 30 June 2022

Stock markets during 2022 have reminded us that the value of equities can rise and fall sharply, hence the importance of investing in the asset class for the long term rather than the short term.

We continue to deploy the same investment philosophy and process as we navigate these markets, and continue to build resilience in the portfolio. The chart below perhaps best illustrates what we have been trying to navigate. It shows the performance of the global investment benchmark (MSCI AC World Index), broken down by sector, for the year to the end of June. It highlights that without investing in energy or utilities (most of which are fossil fuel-based) it has been incredibly difficult to generate decent returns from equities.

Little has changed for us from Q1 to Q2. Most of our companies continue to perform well but the price investors are willing to pay for them has fallen. We have taken some profits from some of our companies that appear to be defying gravity, and removed some where we have quality concerns. We sold Ain Holdings (Japan) after nine years in the strategy. We have long admired the company for its defensive attributes, but we believe it will come under pressure as drug rebates in Japan continue to fall. We exited Philips (Netherlands) – a clear mistake – having joined the journey two years ago. The company’s efforts to build a world-class patient treatment and monitoring business have been plagued by product recalls and supply chain difficulties. 

We sold Ansys (United States) on growing concerns about management incentives; Illumina (United States) due to concerns about the likely negative impact of a legally contested acquisition as well as a patent litigation case; and Masimo (United States) following a confusing acquisition that takes the company into an unrelated industry and threatens to weaken the franchise quality.

We have also added some new names to provide resilience. We bought pharmaceutical and laboratory equipment supplier Sartorius (Germany), and HVAC distribution business Watsco (United States). After two years on the sidelines, we invested once more in consumer company Beiersdorf (Germany) and telecommunications company Elisa (Finland). We also initiated, and are still building positions in, a leading UK-listed auto and household insurance company, as well as a Portuguese-listed retailer that earns most of its revenues and profits in Poland, and which we consider one of the highest-quality, most responsible operators of good-value supermarkets anywhere in the world. All the aforementioned transactions resulted in higher portfolio cash levels at the end of the quarter.

These figures refer to the past. Past performance is not a reliable indicator of future results. For investors based in countries with currencies other than USD, the return may increase or decrease as a result of currency fluctuations. Source for index data: Factset. Sectors shown for the MSCI AC World Index in USD for the year to 30 June 2022, total return (gross of tax).

The war in Ukraine, high inflation, low real-wage growth, rising interest rates, and declining growth and corporate-earnings expectations have produced a widespread sell-off. In this environment, the market has yet to show much concern for corporate debt and rising debt-servicing requirements. We continue to invest in companies we believe are high quality and have defensive attributes, not least illustrated by high-quality financials and solid balance sheets.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q1 2022

Worldwide Sustainability strategy update: 1 January - 31 March 2022

The previous quarter-end summary referenced an estimated 100,000 Russian troops mobilising on the Ukrainian border. Sadly, as we now know, Russia invaded in February. This is a human tragedy, adding to the disruption and uncertainty for global supply chains and the economy.

The first ten weeks of the year witnessed a sharp decline in global stock markets and an even sharper decline by the strategy, with most damage done in January. Outside of January, the strategy clawed back some returns.

While the strategy historically withstood market drawdowns relatively well, past drawdowns have been in the face of economic concern, slow-down, and even shutdown in the case of COVID-19. Rather than economic slowdown, January witnessed a sharp rotation as investors followed inflation and moved quickly into the next phase of economic growth. Capital shifted to early-stage inflation beneficiaries, such as fossil fuels, resources and commodities, and developed world banks; while exiting quality healthcare, technology and small and mid-cap companies. Many of these beneficiaries fail the sustainability or quality hurdles, or both, that make up the core of our investment process.

We believe the most attractive long-term opportunity for our clients lies in the many high-quality companies we already own that experienced significant valuation de-rating, with no discernible underlying change to fundamental company health, and in some cases an improvement. We increased our ownership of technology companies Adyen (Netherlands), Nemetschek (Germany), Halma (UK), Spectris (UK), Zebra Technologies (United States); healthcare companies Tecan (Switzerland), DiaSorin (Italy), bioMérieux (France); and industrial companies MonotaRO (Japan) and Nordson (United States).

In some cases, the bounce back was as sharp and surprising. This saw us reduce our ownership of Alfen (Netherlands), Jack Henry (United States) and again MonotaRO. Due to valuations, we also reduced position sizes in technology companies Ansys (United States), Arista Networks (United States), Constellation Software (Canada) and Fortinet (United States).

Outside this active period of topping and tailing, we bought one company and sold one company. We bought Veeva Systems, the first US company to become a listed Public Benefit Corporation (not to be confused with a B Corp), ensuring that Veeva will work for customers, employees and shareholders. Management believe this shift from shareholder primacy is consistent with customers making 20 – 30 year commitments to Veeva. We sold Edwards Lifesciences (United States), reflecting high valuations and the potential for ongoing surgical interruptions going forward rather than fundamental quality concerns, in the context of a wealth of quality healthcare companies from which to choose.

We take comfort in the long-term quality and investment fundamentals of the portfolio of companies owned for clients. There are many macroeconomic factors driving uncertainty for the year ahead; inflation, interest rates, and both capacity and demand in the economy. We believe it is extremely difficult to know what will play out, but by concentrating on companies with consistent cash flow generation, strong balance sheets, strong sustainability positioning and reliable stewards, we should be well positioned for whatever eventuates.   

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q4 2021

Worldwide Sustainability strategy update: 1 October - 31 December 2021

The final quarter of 2021 witnessed the rampant Omicron strain of the COVID-19 virus, the US Federal Reserve commit to double the rate at which it cuts spending on government bonds (known as tapering), and an estimated 100,000 Russian troops mobilising along the Ukraine border.

All three events illustrate the potential for uncertainty and headwinds for 2022.

During the quarter, we completely sold our shareholdings of Tata Consultancy Services (TCS)Taiwan Semicondcutor (TSMC), Alcon, and Godrej Consumer Products

TCS was owned in the strategy continuously since the second half of 2016. Our motivation to sell was valuation rather than any quality concerns. Having bought into the company at a 5.5% cash flow yield, we believe its move down to 3% in what may well be a lower growth environment made it increasingly difficult to see us making acceptable returns. We remain believers in the stewards and quality investment case and may well own the company again for clients.

TSMC remains one of Asia’s highest-quality companies. Market movements meant we had bought in at about a 8% cash flow yield, and owned the company through a significant industry-wide capacity shortage, while seeing the yield fall to 5.5%. Whilst we don’t know where the semiconductor cycle will go next, we are aware that supply has historically shown quite cyclical traits, and the portfolio contains plenty of semiconductor exposure.

Alcon was owned in the strategy for only 2.5 years following its spin out from parent company Novartis. During this time, we struggled to become comfortable with management and financial quality and have concerns about current valuations, when considering historic industry growth rates and the need for Alcon to generate acquisition growth. During our ownership, we engaged with the company about our concerns with their approach to remuneration, with little impact.

Godrej Consumer remains a well-stewarded Asian consumer goods company. Our sale was a pure valuation decision as market expectations for the company rose to extreme levels, in part following an impressive new CEO hire from Hindustan Unilever. The company trades on about 60x price to earnings and in recent years has rarely grown sales more than mid-single digits.

We own Natura once again after selling it in late 2018, with concerns about the balance sheet and ability to swallow two large acquisitions. Natura has now digested The Body Shop and is moving onto Avon, and the balance sheet is in better shape. We bought into the company three months too early witnessing a share price slide, as concerns continue about the health of the Latin American consumer. However, we believe Natura - a listed Benefit Corporation - will continue its journey to become a global sustainable consumer company.

We also became shareholders of Nemetschek, a German listed software design company for the engineering and construction sector which is majority owned and run by Georg Nemetschek. It is dominant in its sector and we believe will benefit from the tailwind of assisting the property sector to become less resource intensive, and shift towards a circular economy.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Q3 2022

Worldwide Sustainability proxy voting: 1 July - 30 September 2022

Proxy voting by country of origin

Proxy voting by proposal category

During the quarter there were 79 resolutions from six companies to vote on. On behalf of clients, we voted against one resolution.

We voted against the election of the chairman of the audit committee at Vitasoy as the committee met less than four times during the last fiscal year. (one resolution)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q2 2022

Worldwide Sustainability proxy voting: 1 April - 30 June 2022

During the quarter, there were 477 resolutions from 32 companies to vote on. On behalf of clients, we voted against 28 and abstained on four resolutions.

We voted against Ansys’ executive remuneration, as we believe it is subject to adjustments to facilitate payments to management. We voted against the appointment of the auditor, as they have been in place for over 10 years and the company has given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and following best practice.  (two resolutions)

We voted against the appointment of the auditor at Arista NetworksCognex, Constellation Software, Fortinet and Masimo, as per our comments on auditor rotation above. (five resolutions)

We voted against Atlas Copco’s remuneration report as no progress appears to have been made to address shareholder concerns, the CEO's total remuneration exceeds that of peers and there is no disclosure on short-term incentive plan (STIP) targets. (one resolution)

We voted against Illumina’s executive remuneration as they have changed the goalposts of their long-term incentive plan in light of COVID-19. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)

We voted against Philips’ remuneration report as we believe it is unnecessarily complex and is subject to repeated adjustments to facilitate payments to management. (one resolution)

We voted against Natura's request to adopt cumulative voting and to recast votes for an amended slate of directors. We do not believe these requests are in shareholders’ interests. Unfortunately, due to an operational voting error, we abstained from voting on the company’s remuneration policy and the election of a candidate to the supervisory council. We had intended to vote for the remuneration policy, but had flagged areas to follow up with the company on. Our voting intention was to abstain from voting on the establishment of a supervisory council and a separate election for board members. This error did not have a material impact on the results of the meeting. (two resolutions against, two resolutions abstained)

We voted against amendments to Synopsys’ equity incentive plan due to uncertainties with greater stock-based compensation grants. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)

We voted against Texas Instruments’ executive remuneration, as we believe the absolute pay-outs for the CEO are high compared to other executive directors and the median employee. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)

We voted against amendments to Veeva System’s equity incentive plan which would have given authority to the administrator to reprice options without shareholder approval. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)

We voted against WEG’s request to adopt cumulative voting and to recast votes for the amended board and supervisory council slate. We do not believe these requests are in shareholders' interests. We abstained from voting for a minority candidate as we prefer to support the board. (three resolutions against, two resolutions abstained)

We voted against Zebra Technologies’ execution remuneration, as we believe the CEO's total remuneration is high compared to the median employee, and exceeds that of peers. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)

We supported a shareholder proposal relating to Constellation Software which requested the company prepare a report on its plans to identify, address, mitigate and dismantle racial disparities within its workforce. (one resolution)

We supported a shareholder proposal relating to Fortinet which requested the company eliminate its supermajority vote provisions. Supermajority vote requirements can impede shareholders’ abilities to vote on resolutions that are in their interests. (one resolution)

We supported shareholder proposals relating to Illumina and Texas Instruments which would enable shareholders with a combined 10% share ownership the right to call a special shareholder meeting. (two resolutions)

We voted against a shareholder proposal relating to Ansys where shareholders were seeking to declassify the board. We believe a classified board offers some protection against hostile takeovers. (one resolution)

We voted against a shareholder proposal relating to Synopsys which would have enabled shareholders to take action with written consent on important issues that arise between annual meetings. We consider ourselves active shareholders and voting an important responsibility in our investment management duties. (one resolution)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q1 2022

Worldwide Sustainability proxy voting: 1 January - 31 March 2022

During the quarter there were 63 resolutions from six companies to vote on. On behalf of clients, we voted against three resolutions.

We voted against the appointment of the auditor at Infineon Technologies, as they have been in place for over 20 years and the company has given no information on intended rotation. (one resolution)

We voted against the approval of Nordson’s executive compensation (as we did last year). Our preference is for remuneration schemes that are reasonable and simple. We also voted against the appointment of the auditor, who has been in place for over 60 years. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years), helps to ensure a fresh pair of eyes are examining the accounts, and following best practice. (two resolutions)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q4 2021

Worldwide Sustainability proxy voting: 1 October - 31 December 2021

During the quarter there were 57 resolutions from seven companies to vote on. On behalf of clients, we voted against four resolutions.

We voted against the approval of CSL's remuneration report and the equity-based remuneration of the CEO. We have engaged with CSL over a number of years on remuneration and whilst we appreciate and acknowledge the changes they have made to their remuneration structure, our concerns remain that their remuneration focuses on the shorter term over the longer term, and the absolute level of CEO pay and the gap between median pay. (two resolutions)

We voted against the appointment of the Auditor at Chr. Hansen and Coloplast. In both cases, the Auditor has been in place for over 10 years and the companies have given no information on intended rotation. (two resolutions)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

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For illustrative purposes only. Reference to the names of example company names mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies. Companies mentioned herein may or may not form part of the holdings of Stewart Investors. Holdings are subject to change.

Certain statements, estimates, and projections in this document may be forward-looking statements. These forward-looking statements are based upon Stewart Investors’ current assumptions and beliefs, in light of currently available information, but involve known and unknown risks and uncertainties. Actual actions or results may differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements. There is no certainty that current conditions will last, and Stewart Investors undertakes no obligation to correct, revise or update information herein, whether as a result of new information, future events or otherwise.

Source: Stewart Investors investment team and company data. Securities mentioned are all holdings which have/have had a portfolio weight over 0.5% from representative Asia Pacific Sustainability Strategy, Asia Pacific & Japan Sustainability Strategy, Asia Pacific Leaders Sustainability Strategy, European Sustainability Strategy, European (ex UK) Sustainability Strategy, Global Emerging Markets Leaders Sustainability Strategy, Global Emerging Markets Sustainability Strategy, Indian Subcontinent Sustainability Strategy, Worldwide Sustainability Strategy and Worldwide Leaders Sustainability Strategy accounts up to 30 September 2022.

The Stewart Investors supports the Sustainable Development Goals (SDGs). The full list of SDGs can be found on the United Nations website.

Source for Climate Solutions and impact figures: © 2014–2022 Project Drawdown (drawdown.org). Source for Human Development Pillars: Stewart Investors investment team.

Source for climate solutions and human development analysis and mapping: Stewart Investors investment team. Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company), enabling (supported or made possible by products or technologies provided by that company) or indirectly (companies that are involved in and around the solution). Indirect contributions are relevant for climate solutions only.

Investment terms

View our list of investment terms to help you understand the terminology within this document.

Fund data and information

Fund prices and details

Click on the links below to access key facts, literature, performance and portfolio information for the funds and share classes available in this jurisdiction:

Stewart Investors Worldwide Sustainability Fund

Overview of Stewart Investors Worldwide Sustainability Fund performance

Fund name Fund type Currency Price Daily change Price date
Stewart Investors Worldwide Sustainability Class A (Acc) OEIC EUR 224.15 -0.02 25 Nov 2022
Stewart Investors Worldwide Sustainability Class A (Acc) OEIC USD 154.99 -0.19 25 Nov 2022
Stewart Investors Worldwide Sustainability Class B (Acc) OEIC USD 160.66 -0.19 25 Nov 2022
Stewart Investors Worldwide Sustainability Class I (Acc) IRVCC EUR 12.48 -0.18 25 Nov 2022
Stewart Investors Worldwide Sustainability Class VI (Acc) IRVCC EUR 2.61 -0.18 25 Nov 2022
Stewart Investors Worldwide Sustainability Class VI (Dist) IRVCC EUR 12.26 -0.18 25 Nov 2022
Stewart Investors Worldwide Sustainability Class A (Acc) OEIC GBP 260.37 0.13 25 Nov 2022
Stewart Investors Worldwide Sustainability Class A (Inc) OEIC GBP 252.17 0.13 25 Nov 2022
Stewart Investors Worldwide Sustainability Class B (Acc) OEIC GBP 282.39 0.13 25 Nov 2022
Stewart Investors Worldwide Sustainability Class B (Inc) OEIC GBP 247.87 0.13 25 Nov 2022
Stewart Investors Worldwide Sustainability Class VI (Acc) IRVCC USD 8.82 -0.10 25 Nov 2022
Stewart Investors Worldwide Sustainability Class VI (Dist) IRVCC USD 8.80 -0.10 25 Nov 2022
Stewart Investors Worldwide Sustainability Class B (Acc) OEIC EUR 118.44 -0.02 25 Nov 2022
Stewart Investors Worldwide Sustainability Class VI (Acc) IRVCC GBP 11.95 -0.09 25 Nov 2022

Share prices are calculated on a forward pricing basis which means that the price at which you buy or sell will be calculated at the next valuation point after the transaction is placed. Where a fund price is marked XD, this means that the fund is currently Ex-Dividend. Past performance is not necessarily a guide to future performance. The value of shares and income from them may go down as well as up and is not guaranteed. Please note that the yield quoted above is not the historic yield. It is considered that the yield quoted represents the current position of investments, income and expenses in the fund and that this is a more accurate figure. Investors may be subject to tax on their distribution. The yield is not guaranteed or representative of future yields. You should be aware that any currency movements could affect the value of your investment. The Funds within the First Sentier Investors Global Umbrella Fund plc (Irish VCC) are denominated in USD or EUR.