European Sustainability Strategy

Risk Factors

This document is a financial promotion for the Stewart Investors European Sustainability Strategy intended for retail clients 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.
  • Specific region risk: investing in a specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
  • Currency risk: the strategy invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the strategy and could create losses. Currency control decisions made by governments could affect the value of the strategy’s investments and could cause the strategy to defer or suspend redemptions of its shares.
  • Concentration risk: the strategy invests in a relatively small number of companies which may be riskier than a strategy that invests in a large number of companies.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to the names of any company is merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies.

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

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Strategy overview

The strategy was launched in June 2021 and invests in companies in Europe (including the UK), which are positioned to benefit from and contribute to sustainable development.

Strategy update

1 April - 30 June 2021

The European Sustainability strategy was launched on the 10th June. It joins a healthy line of regionally focused strategies launched by the Sustainable Funds Group since 2005.

The strategy draws and builds on the team’s experience gained investing in European companies as part of the Worldwide Sustainability All-Cap and Leaders strategies. Europe has been a rich source of investment ideas for these strategies over the last decade, and their exposure to European companies has often been in the region of 30-40%.¹

The team’s first dedicated European Sustainability portfolio comprises 38 companies we consider to be among the very best sustainability companies in Europe, including six UK companies. Company selection is driven by fundamental, bottom-up analysis of quality and sustainability considerations – as it always is for all our strategies.

The portfolio has also been constructed in a bottom- up way: starting with a blank sheet of paper, we have chosen and combined our favourite European sustainability companies, without paying attention to any benchmark or sustainability index.

In common with all our strategies, the companies all have strong and competitive franchises, exceptional people and cultures, and resilient financials.

Individually and collectively these companies are contributing to a more sustainable world by solving difficult problems, meeting vital needs, and helping society do more with less.

Among them are some of our favourite healthcare, information technology, industrial, and clean energy companies. These companies all have long-term growth drivers and large addressable markets. Many of them have international reach and recognition, and diversified revenues from broad exposure to both developed and emerging markets around the world.

The healthcare companies include DiaSorin, the Italian maker of specialist reagent kits used in immuno and molecular diagnostics, and Carl Zeiss Meditec, the German maker of ophthalmic devices and microsurgery visualisation technologies.

The information technology companies include Halma, the UK-listed owner of lifesaving medical, safety and environmental technology companies, and Vitec Software Group, the Swedish-listed owner of niche software companies enabling efficiencies in energy management, education, health, and public services.

The industrial companies include Norway’s Tomra, the leading maker of automated recycling, reverse vending, and sensor-based sorting technologies, and Belimo, the Swiss-listed maker of energy efficient electrical actuators used to control heating, ventilation and air conditioning systems.

Other companies providing clean energy technologies include Dutch-listed Alfen, a leading player in smart grids, electric vehicle charging stations, and energy storage, and Sweden’s Nibe Industrier, a maker of heat pumps and climate, energy and heating control solutions.

In the materials sector, Denmark’s Chr. Hansen is a world leading manufacturer of microbes, cultures and enzymes that are critical for advancing human, animal, plant and soil health – nature’s way.

For much of the time we expect to hold 30-40 companies and for the ten largest positions to account for 30-40% of portfolio assets, making this a high conviction and relatively concentrated portfolio.

However, sensible guidelines will ensure we hold a diverse range of companies in different sectors, from across the continent, and spanning the full market capitalisation spectrum. We want to maintain a small but meaningful allocation to smaller or early stage, niche companies with great growth potential, while always keeping a close eye on liquidity risk.

Companies that dominate the MSCI AC Europe Index are unlikely to feature prominently in this portfolio; active share should be in the region of 90% or higher. By focusing on Europe’s highest quality and best sustainability companies, the aim is to offer an exciting portfolio that stands out from the crowd. We want it to be a portfolio of genuine sustainability leaders, not companies that simply tick an ESG box.

Our company engagement efforts will focus on making the great companies in this portfolio even better – by encouraging their leaders to go further and do more to address sustainability risks and opportunities, and to make the world a better place for future generations.

To find out more about why we believe Europe offers exciting company investment opportunities please view our latest insights:

>   Reasons to invest in Europe

>   Is Europe leading the way in sustainable business?

>   Chr. Hansen – the magic of microbes

1 Source: Stewart Investors.

Source for company information: Stewart Investors investment team and company data. Portfolio data shown is from representative strategy accounts. 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.

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Proxy voting

1 April - 30 June 2021

European Sustainability

As the strategy only launched in mid-June 2021, there is no proxy voting to report this quarter.

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Fund data and information

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

European Sustainability Fund Class VI Acc EUR European Sustainability Fund Class E Acc USD European Sustainability Fund Class E Acc GBP European Sustainability Fund Class E Acc EUR

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Investment terms 

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

Important information

This material has been prepared for general information purposes only and is intended to provide a summary of the subject matter covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of issue and may change over time.

Some of the information has been compiled using data from representative strategy accounts. This information relates to existing Stewart Investors strategies and has been provided to illustrate Stewart Investors’ expertise in the strategies This material is provided for information purposes only and does not constitute a recommendation, a solicitation, an offer, an advice or an invitation to purchase or sell any fund and should in no case be interpreted as such.

This is not an offer document, and does not constitute an offer, invitation, investment recommendation or inducement to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any matter contained in this material. The distribution or purchase of shares in any funds, or entering into an investment agreement with

Stewart Investors may be restricted in certain jurisdictions.

This material is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this material has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information. We do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

References to “we” or “us” are references to Stewart Investors. Stewart Investors is a trading name of First Sentier Investors (UK) Funds Limited, First Sentier Investors International IM Limited and First Sentier Investors (Ireland) Limited. First Sentier Investors entities referred to in this material are part of First Sentier Investors, a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this material or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested.

Past performance is not a reliable indicator of future results.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to the names of any company is merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies.

United Kingdom

In the United Kingdom this material is a financial promotion and is issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 143359). Registered office: Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB, number 2294743.