Sustainability? It’s been in our DNA for years

SUSTAINABILITY has become such a buzzword in the world of investing that you would be hard pressed to find a fund these days that does not mention it in its marketing literature.

Fund managers are falling over themselves to prove their sustainability credentials, while new funds are launched every month with this focus.

However, Malcolm McPartlin, co-manager of the Aegon Global Sustainable Equity fund, is unfazed by the commotion and growing competition.

‘There are countless new launches, and many fund managers playing catch-up in the sustainability space,’ he says. ‘But we’ve been doing it for a very long time. Aegon launched its first responsible investing fund over 30 years ago and these types of investments represent around 55 per cent of all our assets.’

The Aegon Global Sustainable Equity fund is a concentrated portfolio of around 35 to 45 companies that McPartlin and comanager Andrei Kiselev believe are sustainable, or in other words that are making a positive impact on the world. However, its strong returns mean that it has gained appeal among investors simply looking to grow their wealth as well as those who want to do good with their money.

The £425million fund has outperformed its benchmark of global equity funds by over eight per cent on average since its inception in April 2016, and its returns rank it among the top five per cent over three and five years.

The fund has turned £1,000 into £2,824 over five years. Investing in an index of the world’s biggest companies would have turned the same investment into £1,860 over the same period.

McPartlin believes that this strong performance is because of, and not despite, its sustainable credentials. ‘We believe that companies that are investing and operating sustainably, and that create products that provide sustainable solutions will outperform over the long term,’ he says. Its success has not gone unnoticed. The United Nations Conference

on Trade and Development (UNCTAD) recently awarded it the Sustainable Global Fund Award 2021. It beat 780 other sustainable funds in its category.

McPartlin and Kiselev work with a team of analysts who rate the sustainability of companies in which they may invest. Companies are split into three categories: sustainability leaders, improvers and laggards. The fund contains a combination of the first two.

McPartlin believes it’s important to invest in improvers to help to bring them up to scratch and realise their potential. These companies are also often the greatest source of strong returns. One such improver is Kornit Digital, a global digital printing company that is seeking to transform the way clothes are produced.

‘They have invented a method to print directly on to fabric in a way that produces virtually no water waste,’ says McPartlin. ‘Textile production produces around 20 per cent of the world’s wastewater, so this solution is transformational.’

If improvers do not progress within a couple of years, McPartlin and Kiseley are not afraid to drop them from the fund.

The hunt for sustainable companies sees McPartlin and Kiseley trawling through companies around the world and in all sectors, including biotech, infrastructure, health care and education.

One McPartlin is particularly excited about is IDP Education, which helps with English language training, particularly in developing countries. ‘We think it has strong sustainability credentials as it improves social mobility.’

The fund’s total annual charge is 0.83 per cent and its stock market identification code is BYZJ344.