Morphic Global Opportunities Fund

Product Name

Morphic Global Opportunities Fund

Issuer

Morphic Asset Management

Category

Investment

Type

Fund or Trust

Target

Retail, Wholesale

Certified Since

2017

Asset Classes

International equities

Markets

Australia, New Zealand

Investment Approaches

Negative Screening, ESG Integration

It Includes:

  • Riaa icons 10 Renewable energy and climate change solutions
  • Riaa icons 15 Social and sustainable infrastructure
  • Riaa icons 13 Sustainable transport
  • Riaa icons 31 Sustainable water
  • Investment2 More sustainable companies

It fully excludes:

  • Riaa icons 41 Alcohol
  • Riaa icons 36 Armaments
  • Riaa icons 33 Fossil fuels
  • Riaa icons 42 Gambling
  • Riaa icons 52 Human rights abuses
  • Riaa icons 38 Labour rights violations
  • Riaa icons 34 Logging
  • Riaa icons 99 Pornography
  • Riaa icons 35 Tobacco

Overview

Excerpt from Morphic Global Opportunities Fund (The Fund) Product Disclosure Statement, section 4 - Labour Standards, Environmental, Social and Ethical Considerations: The Fund will be managed in accordance with Morphic’s Ethical Charter (which can be downloaded free of charge at www.morphicasset.com) and labour standards, environmental, social and governance considerations. To achieve the objectives embodied by Morphic’s Ethical Charter, Morphic will seek to build the Portfolio by applying a “negative screen” that prohibits direct investments issued by entities (including their subsidiary entities) in the following industries: • Armaments; • Tobacco and alcohol production; • Gambling; • Coal and Uranium mining; • Oil and gas extraction; • Intensive animal farming and aquaculture; or • Logging of rainforest or old growth timber. The Manager intends to apply a “positive screen” by generally investing a minimum of 5% of the Fund in entities which produce products or services that it considers are likely to improve the planet. The criteria for investments that would fall within the scope of the "positive screen" is set out in the Manager's Ethical Charter. The Manager will monitor and review investments made by the Fund for consistency with the Manager's Ethical Charter and labour standards, environmental, social and ethical considerations on a regular basis (and at least annually). If, as part of its review process the Manager decides any investment made by the Fund is inconsistent with the scope of the "negative screen" or the Manager's Ethical Charter, the Manager will exit this investment as quickly as practically possible. The Manager is also a signatory to the Principles of Responsible Investment (PRI) which entails an explicit commitment to, and the adoption of, six principles which it believes will improve its ability to meet commitments to investors as well as better align our investment activities with the broader interests of society. These six principles are as follows: Principle 1 Incorporating, Environmental, Social and Governance (ESG) issues into investment analysis and decision-making processes Principle 2 Being active owners and incorporating ESG issues into ownership policies and practices Principle 3 Seeking appropriate disclosure on ESG issues by the entities in which the Fund invests Principle 4 Promoting acceptance and implementation of the principles within the investment management industry Principle 5 Working together to enhance effectiveness in implementing the principles Principle 6 Reporting on the Manager’s activities and progress towards implementing the principles Decisions about the selection, retention or realisation of investments for the Fund will have regard to the above principles. The Manager does take into account labour standards when making decisions about the selection, retention or realisation of investments of the Fund. The Manager has no pre-determined view about which or how far labour standards will be taken into account for an investment as each investment of the Fund will be decided on a case by case basis. Additionally, the Morphic Responsible Investment Policy (MRIP, attached to earlier responses) applies to all funds managed by Morphic Asset Management. As well as detailing the negative and positive screens, MRIP details the methodology by which consideration of Environmental, Social and Governance issues is integrated into our investment process. It also details our commitment and approach to Engagement, Proxy Voting and Transparency.


Description


The Fund is managed in accordance with Morphic’s Ethical Charter (attached below to qu. 20A, available on our website, https://morphicasset.com/wp-content/uploads/2017/11/Morphic_Ethical_Charter_W05.compressed.pdf) and labour standards, environmental, social and governance considerations. To achieve the objectives embodied by Morphic’s Ethical Charter, we construct the Portfolio by applying a “negative screen” that prohibits direct investments issued by entities (including their subsidiary entities) in various industries (detailed in answer to qu. 19 above). Additionally, we also exclude any companies that appear in the Norges Bank Investment Management Exclusion list (https://www.nbim.no/en/responsibility/exclusion-of-companies/).

In the event that a company operates in a sector which is not excluded by the negative screen but has greater than 5% of its revenues from an activity which would otherwise be excluded then investment will be prohibited.

The negative screen is enhanced by our research process which incorporates the identification and consideration of material ESG risks and opportunities for every potential and actual investment.

We also apply a “positive screen” by generally investing a minimum of 5% of the Fund in entities which produce products or services that it considers are likely to improve the planet. The criteria for investments that would fall within the scope of the "positive screen" is set out in the Manager's Ethical Charter.

Morphic is also a signatory to the Principles of Responsible Investment (PRI) which entails an explicit commitment to, and the adoption of, six principles which it believes will improve its ability to meet commitments to investors as well as better align our investment activities with the broader interests of society.

To summarise the Fund is ethical for all the reasons below:

  • The Fund does not directly invest in companies that have significant part of their business activities in armaments, tobacco and alcohol, gambling, coal and Uranium mining, oil and gas extraction, intensive animal farming and aquaculture and logging of rainforest or old growth timber.
  • The Fund seeks to invest in businesses which:
  1. Find solutions for reducing the emission of greenhouse gases.
  2. Reduce damage to water supplies.
  3. Work to improve air quality.
  4. Provide alternatives to deforestation.
  5. Otherwise enhance the human experience without creating future problems for mankind or the environment.
  • The Fund integrates ESG analysis of all direct holdings.
  • The investment team engages with all companies the Fund is invested in (directly), seeking clarification on material ESG issues and providing feedback.
  • Finally, the Manager, donates part of its revenue to a variety of charities supporting different causes and manages funds on behalf of charities on a pro bono basis.

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