The fund is actively managed and is not managed in reference to a benchmark. The objective is to maximise the long-term return with the risk level of the fund taken into account. The fund invests in other funds, both daily traded funds and Exchange Traded Funds (ETFs). The fund can also use derivatives, complex investment instruments, such as, but not limited to, futures and options, to achieve its investment objective or to mitigate risks. The share of capital invested in equity funds and fixed income funds will change over time according to a specific risk control model. This model aims to preserve at least 75 per cent of the maximum share price over one year. The fund will invest globally to maintain a diversification over different regions and sectors.
SFDR Fund Classification
This fund has (E) environmental and (S) social characteristics according to Article 8 of the Regulation (EU) 2019/2088. This fund does not have a sustainable investment objective.
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No sustainable investment objective
This fund promotes environmental or social characteristics, but does not have as its objective a sustainable investment.
Principal adverse impacts
Upon and during an investment, the company assesses and monitors indicators that are deemed to indicate the presence of a principal adverse impact. Adverse impacts are addressed with the same approach as sustainability risks. The company’s main principle is to remain as owners and influence. However, the company conducts exclusion when an underlying fund or investee company has a high sustainability risk and when the company believes its ability to influence the fund or company to align its operations with sustainable development is limited. Additional information on how adverse impacts are taken into account is available here.
Environmental or social characteristics of the financial product
The fund takes sustainability factors into consideration, i.e., environmental, social and employee matters, respect for human rights, anti-corruption, and anti-bribery matters. The fund promotes environmental and social characteristics based on three principal and binding pillars: active engagement, positive selection, and exclusion.
Active engagement: the company wants to encourage other fund managers and companies to be compliant with international norms and conventions and manage their business in a more sustainable manner. The company will engage for positive outcomes with the ambition of aligning corporate outputs with improving ESG characteristics.
Positive selection: the company utilizes a sustainability rating (“Sustainability rating”) generated by another entity within the Söderberg & Partners Group. Funds with a better Sustainability rating are preferred when selecting investments. The rating covers two perspectives: positive selection and responsible ownership. Additional information about the rating is available here. The fund aims to invest in target funds that promote environmental or social characteristics, or in target funds that demonstrate improvements of these characteristics. Good governance practices shall be a precondition for these investments.
Exclusion: the company’s main principle is to use its influence to bring about positive changes in its investments, rather than to exclude and divest. However, the fund does not invest in companies or target funds that do not show a willingness to comply with the Policy for Responsible Investments or where it is deemed that the management is not likely to address the problematic issues stated below within an acceptable time frame:
– companies that manufacture, modernize, sell or buy products that are specially designed for controversial weapons or nuclear weapons;
– companies for which thermal coal accounts for more than 30 per cent of the turnover; and
– companies with turnover derived from pornography or tobacco; and
– companies that violate international norms and conventions related to the environment, human rights, labour rights and business ethics, e.g. the UN Global Compact and the OECD guidelines for multinational companies.
No more than 5 per cent of a company’s turnover may be derived from these activities, unless otherwise stated.
The primary focus of the fund’s investments is other UCITS funds and exchange traded derivatives. However, the fund aims to invest in target funds that promote environmental or social characteristics, or in target funds that demonstrate improving sustainable characteristics to the extent possible while considering financial metrics.
There is a commitment by the fund to reduce the scope of investments considered prior to the application of the strategy due to exclusions of controversial sectors.
To assess good governance practices, the fund excludes companies that are in breach of international norms and conventions, whilst including with respect to sound management structures, employee relations, remuneration of staff, and tax compliance. The investments are aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights. Additional information is available in the Policy for Responsible Investments here.
Monitoring of environmental or social characteristics
The environmental or social characteristics are monitored throughout the lifecycle of the fund. This occurs by monitoring that the fund follows its rules for the exclusion of companies pre investment and on a semi-annual basis. The following sustainability characteristics are used for the assessment:
- Revenues from business activities related to the production and distribution of controversial weapons, nuclear weapons, tobacco, pornography, and coal.
- Companies that violate international norms related to human rights, the environment, labour law or combating corruption and bribery.
The target funds’ promotion of environmental or social characteristics are monitored on an annual basis through meetings with the target fund managers and ESG questionnaires.
The process of managing the overall responsible investing activities is coordinated internally within the Söderberg & Partners group, with an active input from the company’s responsible investment committee (“RI Committee”). The RI Committee is involved in the process of updating and overseeing related policies and procedures adhering to the ESG management.
The fund applies semi-annual screening at holdings level to ensure that companies with business activities in the sectors excluded are not present in the fund. The Sustainability rating is updated on an ad-hoc basis, and an overview on the target funds’ rating is analysed on a semi-annual basis. In addition, the attainment of the environmental or social characteristics promoted is controlled through a sustainability questionnaire that is addressed to the managers of the target funds pre investment and on an annual basis. The attainment is also discussed with the managers of the target funds on an annual basis.
Data sources and processing
The company identifies sustainability factors through various means. For example, the company may utilize information from Morningstar, internal analysts, and specialists in the field of sustainable investments, use publicly available information, shared information from peer networks or engage directly with the target fund managers or the management of companies (“Investee companies”).
The information regarding the excluded sectors and activities is collected from Morningstar. In case the result of the company’s screening indicates that there is need for improvement or there are signs of corporate governance misbehaviour, the company shall take the measures deemed to be necessary. The first step is to initiate a constructive dialogue with the relevant fund manager or Investee company. Should the dialogue not lead to an adequate response or necessary changes, other measures should be considered.
The data sources used for the environmental and social characteristics promoted are explained in the Methodologies section. The proportion of data that is estimated is not available since the target funds currently lack this information.
Limitations to methodologies and data
Where information relating to any of the characteristics used is not available, best effort is used for assessment, including a description of any reasonable assumptions used, cooperation with third party data providers or use of external experts.
The fund obtains information about the Investee companies from Morningstar, third-party analysis, and through its own internal analysis. The fund cannot, however, guarantee that the sustainability information obtained is always complete and correct. If material information is lacking and the information risks causing damage to the fund’s promotion of sustainability characteristics, the fund primarily seeks such information from external data providers. It is not expected that such limitations affect the attainment of the environmental or social characteristics promoted by the fund.
The company has procedures in place to manage sustainability risks associated with the fund. A due diligence is carried out on the underlying assets of the fund through the responsible investing approach consisting of active engagement, positive selection, and exclusion. Risk management is employed in investment decisions, products, policy developments, and in engagements.
In case the company’s risk monitoring indicates that there is need for improvement or there are signs of misbehaviour in one of the Investee companies or underlying funds, the company shall take the measures deemed to be necessary. The first step is to initiate a constructive dialogue. Should the holding not respond in an adequate manner or undertake necessary changes, other measures should be considered, like the exercise of shareholder rights or, ultimately, ending the investment.
The primary focus of the fund’s investments is other funds and exchange traded derivatives. For these investments, the possibilities of shareholder engagement by voting are considered limited. However, the company aims to increase the value of the fund by showing engagement in ESG issues in the underlying holdings through three principal pillars: active engagement, positive selection, and exclusion. The company shall take an active and responsible role as shareholder in the companies the funds invest in. In the role as owner, the company shall always aim for long-term values with emphasis on sustainability, activity, and responsibility. Should the monitoring show that the management of the underlying fund fails to perform on issues related to ESG, the company shall act by taking one or several of the following measures: (1) initiate a dialogue with the management of the fund, (2) engage with the management of the fund, or (3) sell its holdings.
Additional information is available in the company’s Policy for Shareholder Engagement here.
Designated reference benchmark
No index has been designated as a reference benchmark.
Implementation of Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector, SFDR.