Sustainable Fund Range brochure
Introduction to sustainability
The Co-operative Asset Management is a stand-alone fund management company, which benefits from the stability and strength of its parent company, The Co-operative Group.
We manage over £18 billion in a range of investment portfolios for UK intermediaries and their clients as well as pension funds, life companies and other institutional clients.
This brochure is designed to give you an overview of our company, our investment process and sustainable fund range. If you would like further information please visit www.co-operativeassetmanagement.co.uk, contact your usual representative or call Broker Services on 0845 603 9986.
What characterises The Co-operative Asset Management?
1. We dig deeper
The Co-operative Asset Management’s sustainable approach, which you can read more about on the following pages, integrates financial and environmental, social and governance (ESG) research themes throughout the investment process, providing an additional layer of analysis that ensures a more thorough research process and more exhaustive questioning.
We look for companies that are likely to benefit
from key positive social and sustainable themes that will boost investment prospects and create long-term value. Research is based on detailed company analysis and the evaluation of longer-term industry themes
and trends.
Our analysts and fund managers look in particular for companies with products or services that are of net benefit to society, and that will enable our portfolios to deliver superior performance.
[back to top]2. We think long term
Our fund managers prefer to focus on generating long-term, sustainable returns for your clients. We believe it is vital to take a long-term view when identifying opportunities for inclusion in our portfolios. Many investment firms focus on the short-to-medium term, an area we believe is overcrowded and where there are fewer chances to uncover profitable opportunities others may have missed.
The investment industry’s growing focus on the short term means that longer-term opportunities are being overlooked, particularly at individual company level where some analysts will disregard long-term drivers to investment valuations. In order to identify mispriced opportunities we focus on the longer term.
We believe there is more potential for outperformance, and less risk overall for your clients, by investing for the long-term. This means that we tend to hold companies in our portfolios for three to four years.
[back to top]3. Focused portfolios
Our portfolios tend to be relatively concentrated – with between 40 to 60 holdings in equity portfolios – and therefore every holding needs to pull its weight. Stock selection is driven by robust and detailed fundamental analysis. ESG analysis is intrinsic to the research process, and we believe that by widening the focus to include key questions on ESG issues, we become more attuned to industry dynamics and can therefore recognise developing themes and trends at an early stage.
[back to top]4. An experienced and stable investment team
The Co-operative Asset Management has over 50 investment professionals based in Manchester. The fund management team consists of nine experienced fund managers who have managed portfolios through numerous market and economic cycles. Fund manager turnover is exceptionally low compared with the industry average, with an average fund tenure of eight years.
[back to top]The Co-operative Asset Management’s investment approach is best characterised by its long-term focus, its robust, pragmatic philosophy of sustainability, and its strong, yet flexible, framework. These characteristics lie at the heart of The Co-operative Asset Management’s implementation, and the strength of this approach is borne out by the investment team’s strong and consistent long-term performance.
"Patience is a core component of our approach."
A sustainable approach is fundamental to The Co-operative Asset Management’s investment philosophy. However, for The Co-operative Asset Management, the concept of “sustainability” is not just about finding companies with sustainable products and services, but also about achieving strong and sustainable long-term investment performance. Our performance figures show that a sustainable approach, with its focus on enhancing the understanding of potential risk and reward, can increase returns for your clients.
Sustainable investment focuses on companies that are likely to benefit from key social themes that have the potential to boost a company’s long-term prospects – and ultimately, its share price. Sustainable investment is not just a question of avoiding companies with problematic business practices. Progressive company managements have already realised that the provision of products and services that deal with key social issues can produce excellent long-term profit growth. Sustainability issues can have a direct - and potentially damaging - effect on a company’s brand perception and risk management, but can also provide additional positive impetus for innovation and growth. Sustainable investment is moving from the periphery of the investment world and becoming mainstream.
An increasing proportion of forward-thinking investment houses are integrating an angle of sustainability into their traditional financial research. Nevertheless, fund managers and research analysts need to ensure that they are asking the right questions and that the resulting information is being used in the right way. At its best, sustainable investment is integral to the entire research process; it is less likely to yield truly impressive results as a bolt-on or afterthought to an investment manager’s everyday approach. Few fund managers can claim to have The Co-operative Asset Management’s integrated approach, or its long and successful track record of sustainable investment.
Investment analysis from a perspective of sustainability can help analysts and portfolio managers to gain a greater understanding of a company, its business and its drivers. By uncovering sustainable or unsustainable business practices, managers and analysts are better equipped to assess potential risks and rewards. In this way, a sustainable approach to company research and stock selection actually enhances the investment process, adding relevant – and sometimes crucial – information to the study of each company.
Properly undertaken, a sustainable approach does not restrict investment opportunities; instead, it helps to increase opportunities by providing additional detail and uncovering information that might have remained hidden. A sustainable approach is not about “screening out” undesirable companies, but about finding attractive companies with strong long-term prospects that could provide a significant future boost for their share prices. Rather than limiting an investment universe, a sustainable approach aims to ensure that the potential universe is as broad as possible.
[back to top]Sustainable investment themes
1. Demographics
The issue of demographics continues to become increasingly relevant. The populations of many developed nations – including the UK – are ageing, and this will increase demand for healthcare services and medicines. Elsewhere in the world, UK companies with overseas operations are likely to benefit from the inexorable rise of the consumer in emerging Asian countries.
[back to top]2. Infrastructure and construction
In both the developed and the developing world, infrastructure is a core long-term theme. Developing nations need new infrastructure, while developed countries need their existing infrastructure to be maintained and redeveloped. This trend should provide considerable opportunities for companies involved in the building, maintenance and ownership of this infrastructure. Meanwhile, urban regeneration specialists, who focus on improving and building on previously used land, can take advantage of restrictive planning controls and a significant proportion of unused “brownfield” land.
[back to top]3. Power and climate change
The growing global power shortage is another issue that is likely to affect many companies. Increasing demand for power, coupled with a lack of new generation capacity, creates opportunities for companies involved in the development of power generation and accentuates the value of existing generation capacity, a theme that is not yet fully appreciated by the broader investment community. Finally, climate change is a massively important theme, and increasing legislation and rising environmental standards will create opportunities for companies across a wide range.
[back to top]A sustainable approach to investment is a bonus. Your clients do not have to sacrifice returns and can actually enhance long-term performance. For The Co-operative Asset Management, a truly sustainable approach is inextricably linked to the pursuit of strong, sustainable and improving returns.
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