First Sentier Multi-Asset Real Return Fund

Product Name

First Sentier Multi-Asset Real Return Fund

Issuer

First Sentier Investors

Category

Investment

Type

Fund or Trust

Target

Retail, Wholesale, Institutional

Certified Since

2021

Asset Classes

Diversified / Multi-asset

Markets

Australia

Investment Approaches

Negative Screening, Engagement and voting

It Includes:

  • No inclusions5 No specific themes

It has some level of screening for:

  • Riaa icons 33 Fossil fuels

It fully excludes:

  • Riaa icons 41 Alcohol
  • Riaa icons 42 Gambling
  • Riaa icons 50 Nuclear power
  • Riaa icons 99 Pornography
  • Riaa icons 35 Tobacco

Overview

The Fund is managed using an objective-based approach. It is implemented through a dynamically managed investment portfolio across asset classes in order to maximise the likelihood of achieving the real return objective whilst minimising deviations from that target. The investment approach allows the portfolio to respond to changing market environments, both capturing opportunities and managing risks relative to the objective. The fund’s investment process integrates responsible investment (RI) considerations, utilising RI factors to generate a more consistent return profile over time in line with the overall objectives of the fund. These RI factors include an extensive list of ethical (values) screens, proxy voting and proactive company engagement which contribute to the fund’s long term return drivers and risk management. Derivatives may be used for risk management or return enhancement. The fund may hedge some or all of its currency exposure.


Description


For the Multi-Asset Solutions team, the activities associated with RI fall into two groups:

1. Ethical (Values) Screens: A values-based approach to decision-making. We consider whether to invest in a company based on an ethical framework, regardless of the return outlook. In the multi asset context this also extends to bonds and commodities. 

2. ESG Considerations: Environmental, Social and Corporate Governance considerations are primarily concerned with the assets held in the portfolio as a return driver. Research has shown that ESG considerations are a positive driver of long term performance. We also undertake engagement and proxy voting with the companies we hold in the portfolio, in order to drive particular behaviours.

These two activities may overlap at times. For example, we may seek to screen out companies with poor ESG practices to enhance returns, or exclude companies because of ethical reasons, which also have poor future return expectations, e.g. companies with fossil fuels exposure.

These activities are integrated within our investment process – both when we set our longer-term Neutral Asset Allocation (NAA)and our shorter term Dynamic Asset Allocation (DAA).

Please refer to the below activity and revenue thresholds pertaining to our screens:

Screening criteria | Description
| ESG Risk Category | Companies with Severe and High Risk are restricted
| Issue - Carbon - Own Operations-Risk Category | Companies with Severe, High and Medium Risk are restricted
| Issue - Carbon - Products and Services-Risk Category | Companies with Severe, High and Medium Risk are restricted
| Animal Testing Non-pharmaceutical products-Level of Involvement | Non-pharmaceutical products: Not involved.
| Animal Testing Suspected involvement (Non-pharmaceutical products)-Level of Involvement | Suspected involvement (Non-pharmaceutical products): Not involved.
| Genetically Modified Plants and Seeds Growth-Level of Involvement | Growth: 0% and above is restricted.
| Adult Entertainment Production-Level of Involvement | Production: 0% and above is restricted.
| Adult Entertainment Distribution-Level of Involvement | Distribution: 5% and above is restricted.
| Fur and Specialty Leather Production-Level of Involvement | Production: 0% and above is restricted.
| Nuclear Production-Revenue Level of Involvement | Production: 0% and above is restricted.
| Nuclear Production-Capacity Range | Production-Capacity: 0% and above is restricted.
| Controversial Weapons Tailor-made and essential-Level of Involvement | Tailor-made and essential: Not involved.
| Tobacco Products Production-Level of Involvement | Production: 0% and above is restricted.
| Tobacco Products Retail-Level of Involvement | Retail: 5% and above is restricted.
| Alcoholic Beverages Production-Level of Involvement | Production: 5% and above is restricted.
| Alcoholic Beverages Retail-Level of Involvement | Retail: 5% and above is restricted.
| Gambling Operations-Level of Involvement | Operations: 5% and above is restricted.
| Gambling Specialized Equipment-Level of Involvement | Specialized Equipment: 5% and above is restricted.
| Thermal Coal Power Generation-Capacity Range | Power Generation-Capacity: 0% and above is restricted.
| Thermal Coal Extraction-Level of Involvement | Extraction: 0% and above is restricted.
| Thermal Coal Power Generation-Level of Involvement | Power Generation: 0% and above is restricted.
| Thermal Coal Power Generation-Capacity Range | Power Generation-Capacity: 0% and above is restricted.
| Oil Sands Extraction-Revenue Level of Involvement | Extraction: 0% and above is restricted.
| Oil Sands Extraction-Capacity Range | Extraction-Capacity: 0% and above is restricted.

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