ATRAM fund shows investors sustainability investing is the future

LIKE MOST Philippine equity funds, the ATRAM Sustainable Development and Growth Fund (SDGF) experienced challenging times over the past two years. Apart from the weakness of the Philippine stock market, the Fund also faced the rise of Environment, Social, and Governance (ESG) investor doubts with the rise in fossil-fuel prices and high-profile allegations of greenwashing in the US.

The SDGF is designed to outperform the market by selecting the top-rated companies in terms of integrating outcomes based on UN Sustainable Development Goals (SDG). The pioneering fund is built around a robust sustainability and fundamental research framework that allows ATRAM to scale and engage companies regarding their ESG/sustainability strategies and execution.

ATRAM’s SDGF marked its third anniversary last February with a strong performance that offers proof that its design delivers. The Fund has outperformed the Philippine Stock Exchange Index (PSEi) by 5% since inception and is currently one of the best performing funds in ATRAM with and 1.7% beat on a year-to-date (YTD) basis.

“The performance of the SDGF has taught us two things about sustainability investing. Firstly, understanding the ESG risks of a company helps control portfolio risk. The SDGF has a lower ratio of return to risk relative to the PSEi. In other words, the strategy pays a higher return for less risk compared to the market,” Sandra Araullo, chief investment officer of ATRAM, shared.

“Secondly, sustainability outcomes are correlated to both value and growth factors of companies, which supports our view that this approach is the future of fundamental investing,” she added. “The outlook for sustainability issues like climate change, quality education, and R&D are increasingly important to finding value in the market. In sum, sustainability investing is not simple, nor is it easy. But it is necessary.”