Ausbil Active Dividend Income Fund - Active ETF · ASX:DIVI
Ausbil Active Dividend Income Fund - Active ETF — Ausbil Investment Management — ESG Presentation (June 2018)
25 slides from Ausbil Active Dividend Income Fund - Active ETF's sustainability presentation, June 2018
Slide 1: Demystifying Sustainable Investing
Ausbil Investment Management Demystifying Sustainable investing June 2018 Måns Carlsson-Sweeny Head of ESG Research Nicholas Varcoe ESG Research Analyst
Slide 2: Why Ausbil for Australian equities
Why Ausbil for Australian equities Strong, well managed organisation backed by New York Life • Boutique Core Australian equities manager • A top down/bottom up investment process that has delivered strong long term alpha • Investment focus is earnings and earnings revisions • Dedicated in-house ESG
Slide 3: Ausbil investment team
Ausbil investment team Integrated functions within portfolio management PORTFOLIO CONSTRUCTION COMMITTEE JOHN GRACE (16/32) PAUL XIRADIS (22/39) GIAN PANDIT (3/27) Co-Head of Equities CIO / Head of Equities Deputy Head of Equities RESEARCH ECONOMICS MICROCAP NICK CONDOLEON (11/24) JIM CHRONIS (4/26)
Slide 4: ESG capability
Ausbil Investment Management ESG capability
Slide 5: Agenda
Agenda • What is ESG (environmental, social and governance) integration and why do investors use it? • How does Ausbil apply ESG integration in practice? • Recent examples • Active ownership or engagement on ESG issues • Ausbil’s Active Sustainable Equity Fund 5
Slide 6: Evolution of responsible investment
“Evolution” of responsible investment Responsible Investment Socially responsible Ethical investment ESG integration investment • Ethical investment: typically based on exclusions only (negative screening) • Socially responsible investment: positive screening / thematic investments. • ESG integratio
Slide 7: ESG and returns – does it pay off?
ESG and returns – does it pay off? • Academic / empirical studies are generally supportive that ESG drives higher returns – Macquarie 2016; companies with engaged workforces consistently outperformed over nine years, 6.6% annually in the last 3 years. – ‘ESG and financial performance’ 2015: empirica
Slide 8: Why ESG integration?
Why ESG integration? • The importance of intangibles has increased over time. • Analysing intangible drivers can help investor make better informed decisions Analysis by E&Y on the components of S&P500 market value shows that the majority of a company’s value comes from intangible drivers and that t
Slide 9: What are ESG drivers?
What are ESG drivers? Examples • Environmental: Environmental risk management processes and performance, EPA compliance, CO2 and other greenhouse gas emissions, climate change adaptation / risk mitigation and more. • Social: Corporate culture, supplier relationships / supply chain risk management, c
Slide 10: Ausbil's ESG capability
Ausbil’s ESG capability ESG Integration • What does ESG integration mean to Ausbil? Proprietary ESG research: – Better informed investment decisions -> can lead to better outcomes – Active ownership and engagement on ESG issues • ESG research: natural fit with Ausbil’s investment philosophy – Earnin
Slide 11: Ausbil's ESG capability: ESG elements in the process
Ausbil’s ESG capability ESG elements in the Australian equities process STAGE 1: STAGE 2: STAGE 3: STAGE 4: Macroeconomic Sectoral Stock Portfolio Analysis Analysis Selection Construction Identify attractive Fundamental stock Robust, appropriate Assess current economic sectors and portfolio analysis
Slide 12: Ausbil's ESG capability: Recent examples
Ausbil’s ESG capability Recent examples • Earnings revisions: • Food safety issues • OH&S events • Transparency issues • Earnings sustainability: • Payday lending • Underpaid workers • Management quality: • ESG as proxy for management quality • Corporate governance issues • Momentum / direction on E
Slide 13: Advantages of Proprietary ESG Research
Ausbil’s ESG capability Advantages of Proprietary ESG Research • ESG research tailored to fit Ausbil’s investment philosophy • Unique investment insights generated from a variety of sources • ESG integrated investment team generates significant discussion and dialogue about key ESG issues on a regul
Slide 14: Industry participation
Ausbil’s ESG capability Industry participation • Signatory to Principles for Responsible Investment (PRI) • Asset manager representative on the PRI Australian Network Advisory Committee • RIAA member since 2003 • Active member of RIAA Engagement Working Group & RIAA Human Rights Working Group • Memb
Slide 15: Active ownership and engagement 2017
Ausbil’s ESG capability Active ownership and engagement 2017 • Extensive corporate access enables regular engagement on ESG issues • Ausbil engaged on approximately 140 occasions with 65 companies in 2017 • Ausbil carry out engagement as a team (PMs, stock analysts & ESG team) • Engagement occurs at
Slide 16: Active ownership and engagement 2017 - examples
Ausbil’s ESG capability Active ownership and engagement 2017 - examples • Human rights in supply chains • Company engagement – focused on industry best practice • Government engagement - Modern Slavery Act • Collaborative engagement – Bangladesh Accord • Climate change: • Task Force on Climate-relat
Slide 17: Examples of key themes for 2018
Ausbil’s ESG capability Examples of key themes for 2018 • Continued clean-up of the environment in China • Royal Commission into banks / government inquiry into franchises -> increased regulation • Cyber security China ESG field trip in 2016: garment factory in Guangzhou and washing & dyeing facilit
Slide 18: Ausbil Active Sustainable Equity
Ausbil Active Sustainable Equity Philosophy & process
Slide 19: Process summary
Ausbil Active Sustainable Equity Process summary Conclusions constantly retested STAGE 1: STAGE 2: STAGE 3: STAGE 4: Macroeconomic Sectoral Stock Portfolio Analysis Analysis Selection Construction Identify attractive Fundamental stock Robust, appropriate Assess current economic sectors and portfolio
Slide 20: Stage 3: ESG stock selection
Stage 3: ESG stock selection Proprietary ESG research outputs Qualitative outputs STAGE 1: Macroeconomic • Key ESG related risks and opportunities Analysis • ESG SWOT analysis STAGE 2: Sectoral Analysis Quantitative outputs – ESG scores STAGE 3: Stock • Company ESG score (range 1–5) Selection How a
Slide 21: Stage 3: Refined universe – ESG filter
Stage 3: ESG stock selection Refined universe – ESG filter ESG Filter STAGE 1: Macroeconomic Refine investible universe based on ESG criteria, removing companies subject to long- Analysis term earnings sustainability risk STAGE 2: Sectoral 1. Companies with material direct exposure or indirect expos
Slide 22: Stage 3: Stock ranking tool (SEET)
Stage 3: ESG stock selection Stock ranking tool (SEET) Stock ranking STAGE 1: Macroeconomic Analysis Stocks in the universe are ranked by a proprietary tool - Sustainable STAGE 2: Earnings Evaluation Tool (SEET) Sectoral Analysis SEET takes into account both financial analyst conviction scores (50%)
Slide 23: Stage 4: Portfolio construction
Stage 4: Portfolio construction Construct a robust, appropriate and risk aware model portfolio • Minimum 50% of portfolio by weight must come from top 1/3rd of SEET STAGE 1: Macroeconomic ranking Analysis • Specialist portfolio construction team – Paul Xiradis Portfolio Manager, STAGE 2: Sectoral An
Slide 24: Ausbil Active Sustainable Equity strategy key characteristics
Ausbil Active Sustainable Equity strategy Key characteristics • Specialist portfolio construction committee (Paul Xiradis Portfolio Manager, Måns Carlsson-Sweeny Head of ESG Research, Nick Condoleon Head of Research) • In-house ESG research team creating proprietary research • Benefits from Ausbil’s
Slide 25: Disclaimer
DISCLAIMER Important information for presentation recipients The information contained in this presentation has been prepared for general use only and does not take into account your personal investment objectives, financial situation or particular needs. Before you make any decision about whether t
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