Presenting the M&G Positive Impact Fund
FOR PROFESSIONAL INVESTORS ONLY. CAPITAL AT RISK.
Celebrating the third anniversary of the M&G Positive Impact Fund.
We look at the portfolio from five angles to see what makes it different to its peers and how M&G defines the impact themes that make up the portfolio.
In this video, fund manager
John William Olsen explains what impact investing is and why it can help in the race to net-zero carbon emissions
No investment strategy or risk management technique can guarantee returns or eliminate risks in any market environment. RWC Partners Limited is authorised and regulated by the Financial Conduct Authority.
Going beyond conventional investing, which is based purely on achieving financial returns, impact investing seeks to not only deliver attractive returns but also do good for both society and the environment.
“How we address climate change, pollution, equality and poverty will directly influence the shape of the world we leave to future generations,” says John William Olsen, manager of the M&G Positive Impact Fund.
The good news, argues Olsen, is that impact investing can be an integral part of the solution through investing in the listed equities of companies that aim to have a positive impact on society around the globe.
The value of the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
“We believe companies whose products and services meet some of these acute social or environment needs are set to exhibit very strong growth characteristics,” he says. “The opportunities are massive and, in our opinion, impact investing gives us a direct line into them.”
Unearthing the hidden gems
The aim of the M&G Positive Impact Fund is twofold: first, to beat the MSCI All Countries World Index over any rolling five-year period and, second, to invest in companies that aim to have a positive societal impact through addressing the world’s major social and environmental challenges.
To evaluate if a stock is suitable for investment, the team use what it calls its ‘3I’ methodology. The three I’s refer to: investment, intention and impact. For stocks to even be considered for investment they must rank above-average in all three categories.
The portfolio is diversified around six main impact areas. Three relate to the environment: climate solutions, cleaner air, water, land and the circular economy. The other three have a social purpose, focusing on better health, better working conditions and social equity.
To provide additional diversification the fund invests in three types of impact companies: pioneers, enablers and leaders.
“We have a rigorous selection process to identify quality, impactful companies that we can invest in if the timing and the pricing is right,” says Olsen. “From those companies we build a concentrated portfolio of around 30 stocks that we invest in for the long term.”
On its own, Olsen says impact investing cannot get the world to being net zero. Instead, he argues it all comes down to companies and consumers.
Fund dividend yield
*Dividend yield based on trailing 12 month distribution divided by the latest NAV.
Source: RWC, FactSet (using GICS Sector Classifications via MSCI). All data as at 30th April 2021.
“As investors we can play a role in certain areas,” he says. “We can help push for disclosure, for target-setting and to help police the companies to make sure they do what they have promised.”
Placing pressure on other stakeholders and governments around the world will also make a difference, says Olsen.
Compared with traditional global equity products, the portfolio has a larger proportion of its assets invested in smaller companies and emerging areas. This reflects opportunities in earlier-stage companies and the greater need for impact capital in developing economies.
“We don’t believe you have to choose between sound investment returns and positive societal outcomes. With impact investing you could potentially have both,” says Olsen.
Olsen and Constable-Maxwell are supported by three dedicated impact analysts, Randeep Somel, Thembeka Stemela and Jasveet Brar. Somel and Brar are also the respective lead managers of the M&G Climate Solutions and M&G Better Health Solutions funds.
Olsen – who has 20 years’ investment experience – is the lead portfolio manager. He is supported by Ben Constable-Maxwell, who is head of sustainable and impact investing at M&G.
The Positive Impact team is also supported by 44 active equity professionals, 59 research specialists and M&G’s 14-member sustainability and stewardship team.*
“I can say without blushing that we have experts in both the healthcare and climate solutions spaces that have taught themselves that trade while they have been at M&G,” Olsen says. “It’s all about reading a lot of books and getting there.”
*Source: M&G Investments Positive Impact Equities Team
Past performance is not a reliable indicator of future results.
Source: Federated Hermes as at June 2020. Performance presented in Euros for the F EUR Acc share class, net of fees and charges. Fund inception: 11 May 2010. Benchmark: ICE BofA Merrill Lynch Global High Yield Constrained EUR Hedged.
Past performance is not a guide to future performance
*The benchmark is a target which the fund seeks to outperform. The index has been chosen as the fund’s benchmark as it best reflects the scope of the fund’s investment policy. The benchmark is used solely to measure the fund’s performance and does not constrain the fund’s portfolio construction.
To 31 October 2021, the fund has accumulated assets under management of £218m.
The M&G Positive Impact Fund passed its three-year anniversary in November 2021.
In addition to running the Positive Impact Fund, M&G also manages the M&G Climate Solutions and Better Health funds.
The fund is actively managed. The fund manager has complete freedom in choosing which investments to buy, hold and sell in the fund. The fund’s holdings may deviate significantly from the benchmark’s constituents.
An annual report is published to provide an assessment of the positive, societal and environmental impact of each holding in the fund.
Source: Morningstar Inc., UK database, 31 October 2021, sterling I class shares, income reinvested, price to price.
M&G Positive Impact Fund – Calendar year performance
The value and income from the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
The fund holds a small number of investments, and therefore a fall in the value of a single investment may have a greater impact than if it held a larger number of investments.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.
Further details of the risks that apply to the fund can be found in the fund’s Prospectus.
The views expressed in this document should not be taken as a recommendation, advice or forecast.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
For financial advisers only. Not for onward distribution. No other persons should rely on any information contained within. This financial promotion is issued by M&G Securities Limited which is authorised and regulated by the Financial Conduct Authority in the UK and provides ISAs and other investment products. The company’s registered office is 10 Fenchurch Avenue, London EC3M 5AG. Registered in England and Wales. Registered Number 90776.