Alex Araujo, Fund manager
Four major themes currently dominate the changing world we live in: demographic change, the need to address environmental challenges, the expansion and renewal of infrastructure and technological innovations. Every day, every individual is affected. Our goal is to exploit the long-term opportunities arising from these thematic trends in a disciplined manner.
The fund focuses on four main themes: demographics, environment, infrastructure and innovation. Each of these four themes is divided into two sub-themes.
At least 80% of the Fund is invested in the shares of companies, across any sector and of any size, from anywhere in the world, including emerging markets. The Fund invests in securities that meet the ESG Criteria, applying an Exclusionary Approach and Positive ESG Tilt as described in the precontractual annex.
The fund promotes environmental and social characteristics and whilst sustainable investment is not one of the fund's objectives, it will have a minimum allocation of 20% to sustainable investments.
The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
Demographic change is ongoing. As the population ages, people's needs change. Another trend is urbanisation, i.e. the shift in the population to towns and cities worldwide. On the one hand, we are focusing on solutions for the ageing population and the trend towards a healthier and smarter life. On the other hand, we are targeting companies that meet the demand of modern consumers and benefit from global urbanisation.
Example of a company included in our portfolio (as at 31 December 2022): Shimano
The Japanese company is a leading international manufacturer of bicycle parts and benefits from the trend towards a healthier lifestyle. In addition to bicycle parts, Shimano also develops e-bike systems, offering mobility solutions to the changing habits of modern urban dwellers.
Without infrastructure the daily things of our everyday life, which we take for granted, are inconceivable. In the same way, the economy can only grow and prosper if it has a functioning infrastructure. By 2030, there will be an investment gap of several trillion US dollars that needs to be closed or at least reduced. From roads to airports to railroad networks, companies that we could invest in include those that guarantee the smooth functioning of the economy and our everyday lives.
Example of a company included in our portfolio (as at 31 December 2022): Vinci
One of the world's leading infrastructure groups. On the one hand, Vinci is an operator of various infrastructure facilities including toll roads, which generate stable and reliable cashflows. On the other hand, as a construction group, the company benefits over the long term from the urgent need to invest in the expansion and renewal of infrastructure.
In the course of climate change, people's environmental awareness is increasing rapidly. In order to achieve the specified climate targets, CO2 emissions must be drastically reduced worldwide over the next few decades. The path towards renewable energies plays a decisive role here. But also the supply of clean water, the sustainable handling of waste and the efficient use of resources by way of recycling are in focus here.
Example of a company included in our portfolio (as at 31 December 2022): Republic Services
The US company is a market leader in waste management and recycling, providing essential services to support a cleaner, safer and healthier world. An industry leader in sustainability with clearly defined climate-related targets.
The rapidly advancing digitalisation apparently knows no bounds. Business processes are being shifted to the ‘cloud’ and all electronic devices are being networked with each other. Furthermore, the mobility sector is on the verge of major changes. These include alternative drive models (e.g. electric motors, hydrogen drives) and autonomous driving. Some of the companies involved in these areas have great growth prospects ahead of them.
Example of a company included in our portfolio (as at 31 December 2022): Alphabet
The owner of Google provides exposure to the growth in the new economy, without the high multiples attached to many of its peers. The US company is cash generative and provides portfolio protection in momentum-driven markets.
Thanks to our unique thematic investment approach, we select equities exclusively from companies that can benefit from our four chosen themes. The focus is not simply on exciting ideas, but on proven business models with robust cashflows and solid growth prospects. We also apply a strict valuation discipline to ensure that we do not overpay for the growth we seek.
The investment process combines a top-down approach with bottom-up stock selection. Top-down research is all about finding the right themes and sub-topics to give structural momentum to growth. The bottom-up part of the process focuses on potential candidates for the portfolio which undergo a thorough fundamental review. The result is a concentrated portfolio of 40 to 60 companies diversified across a range of countries and sectors. Each investment is always long-term - we only invest in companies that we want to retain for the next few years.
ESG (Environmental, social and of governance) factors play an important role in our investment process because we strongly believe that sustainability considerations can have meaningful implications for a company’s investment case from a financial perspective. In addition to M&G’s group policy on controversial weapons and coal, the fund applies norms-based exclusions (companies deemed to be in breach of UN Global Compact Principles of human rights, labour, the environment and anti-corruption) as well as sector-based and/or values-based exclusions, including tobacco, gambling, adult entertainment, thermal-coal power generation and nuclear power generation. The fund is classified as Article 8 under SFDR.
* The benchmark is not an ESG benchmark and is not consistent with the ESG Criteria.
For more information on the financial terms used in this page, please consult the glossary.
For more information on the funds sustainability, click here.
This is a marketing communication. Please refer to the prospectus and to the key information document (KID) before making any final investment decisions.
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
Please note, investing in this fund means acquiring units or shares in a fund, and not in a given underlying asset such as building or shares of a company, as these are only the underlying assets owned by the fund.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.
ESG information from third-party data providers may be incomplete, inaccurate or unavailable. There is a risk that the investment manager may incorrectly assess a security or issuer, resulting in the incorrect inclusion or exclusion of a security in the portfolio of the fund.
Further details of the risks that apply to the fund can be found in the fund's Prospectus
The views expressed in this document should not be taken as a recommendation, advice or forecast.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.