The Australian Equities Socially Responsible Portfolio is designed for investors who are seeking a competitive return but do not want investments judged to have involvement in gaming, pornography, armaments and tobacco. A positive environmental, social and governance (ESG) screen is also used to identify those companies with enhanced ESG policies.
The Australian Equities Socially Responsible Portfolio has an investment style best described as ‘style neutral’, focusing on ESG issues. The stock selection process has a strong bottom-up discipline and focuses on buying quality companies at reasonable prices. We define quality companies as being those companies with the following five attributes: earnings strength (particularly improving return) superior industry position a sound balance sheet strong management low ESG risk. The Australian Equities Socially Responsible Portfolio incorporates a negative portfolio screen across: pornography gaming armaments tobacco. A positive ESG screen is also used to identify those companies with enhanced ESG policies. DNR Capital sources ESG-related information from Bloomberg. Where we are satisfied that a company possesses quality characteristics, then it is eligible for inclusion in the portfolio. However, it must also represent value and sit comfortably within our portfolio construction requirements. A range of valuation methodologies are used depending on the nature of the company being assessed to identify mispriced opportunities. The portfolio construction process is influenced by a top-down economic appraisal and also considers the risk characteristics of the portfolio, such as stock and sector correlations.
Exclusions note - Pornography: Direct - Production, distribution and sale of pornography as a core business; Indirect - Supply of pornography not part of core business (e.g. Newsagency).
Exclusions note - Tobacco: Direct - Manufacture and distribution of tobacco-related products/Tobacco; Indirect - Sale of tobacco-related products as a non-core business or packaging of tobacco-related products as a non-core business.
Exclusions note Armaments: Direct - Supply and distribution of weapons components to Defence Forces or any other business/individual.Armaments; Indirect - Manufacture or sale of non-weapon equipment, infrastructure, IT, communication services, transport or logistics or maintenance services to Defence Forces etc.
Exclusions note Gambling: Direct - Core business of owning or operating gaming related business or manufacture and supply of gaming equipment and systemsGaming; Indirect - Servicing gaming equipment and systems or owning/operating a gaming related business such as a non-core activity.