Investment objective
To provide long-term capital appreciation with a diversified and actively managed portfolio of European sustainable equities, without any specific restriction on tracking error and by selecting securities complying with Environnemental, Social and Governance ( ESG) responsibility criteria. The portfolio will be composed of issuers that are either leading in ESG best-practice or attractive due to their progression in ESG.
Investment policy
The sub-fund promotes environmental and social characteristics and qualifies as an investment product in accordance with article 8(1) of Regulation (EU) 2019/2088 on sustainability related disclosures in the financial services sector.
The sub-fund invests predominantly in transferable equity securities such as equities, other equity shares such as cooperative shares and participation certificates issued by, or warrants on transferable equity securities of, companies which are domiciled in or exercise the predominant part of their economic activity in Europe. Selection of investments will rely on a combination of financial criteria, as well as Environmental, Social & Governance criteria. The minimum asset allocation in such securities on a consolidated basis (direct and indirect investments) will be of 60% of the sub-fund's net assets. Moreover, the minimum ownership of equities in companies established in countries of the European Economic Area having concluded a tax agreement with France including a clause on administrative cooperation for combating fraud and tax evasion will be at least 75% of the sub-fund’s net assets. A maximum of 50% of the net assets of the sub-fund may be invested in the small cap sector.
In that respect, in order to take into account the stakes and challenges specific to each issuer in terms of ESG, the External Investment Manager has developed an internal ESG analysis process. The ESG assessment of companies is assessed by their ability to create value by integrating sustainability into their business activities and the interest of stakeholders within their operating and financial managerial processes.
Sustainability Challenges are analysed from two distinct, but interlinked, angles, Business Activities and Stakeholder Management. The External Investment Manager has developed a structured and consistent ESG analysis process enabling the selection of companies in accordance with the latter’s ability to deal with these two sector-specific challenges.
The ESG Universe ( eligible companies) is constructed using proprietary ESG framework comprising the following pillars:
- Controversial Activities: exclusion of companies involved in selected activities that do not embody sustainability.
- Norms-Based Analysis: companies that do not uphold the principles of the UN Global Compact are excluded.
- Business Activities Analysis: Companies are exposed to major long-term ESG trends that can strongly influence the environment in which they operate and that may shape their future market challenges and long-term growth. We have identified five key sustainability trends: Climate Change, Resource & Waste, Healthy living & Well-being, Demographic Shifts and Digitalization & Innovation
- Stakeholders Analysis: the sub-fund evaluate the extent to which each company incorporates the interests of six stakeholders in its long-term strategy: Investors, Human Capital, Suppliers, Clients, Society and Environment.
- Stewardship: Engagement, Dialogue, and Proxy Voting are central to the investment process in providing additional information on issuers and encouraging best practices.
The ESG information are integrating and analyzing into equity investment decisions in order to better assess the risks and opportunitiesthat stem from the business activities and operations of companies.
The manager's ESG analysis will cover at least 90% of the fund's investments. The percentage of "non-rated ESG" assets in the portfolio should be no more than 10% of the net assets.
This in-depth analysis makes it possible to focus securities selection on the best companies from an ESG perspective, to eliminate issuers with the worst ESG profiles from the selection and/or to focus selection on issuers with the greatest exposure to sustainable development themes.The bottom 20% (at least) of issuers are removed from the universe.
As part of the Management Company’s Sustainable Investment Policy, the sub-fund complies with the exclusion rules of article 8 investment product.
The methodological limitations can be assessed in terms of the nature of the ESG information (quantification of qualitative data), ESG coverage (some data are not available for some issuers) and the coherency of ESG data (methodological differences).
The sub-fund may also hold on an ancillary basis cash and cash equivalents including certificates of deposit and shortterm deposits.
The sub-fund may invest for maximum 10% of its net assets in funds that have been selected in accordance with a number of qualitative and quantitative criteria. The qualitative analysis assesses the stability and strength of the investment manager, as well as its investment process and philosophy. The quantitative selection process aims to select only funds with proven risk-adjusted performance.
Investments in debt securities will not exceed 15% of its net assets.
The instrusments described below are not covered by the ESG analysis.
The use of financial derivative instruments is restricted to:
- listed instruments in accordance with the investment policy (including but not limited to equity index futures, currency futures);
- OTC instruments for currency hedging purposes (including, but not limited to forward and foreign currency exchange contracts).
The use of OTC instruments for purpose other than currency hedging is prohibited (including, but not limited to OTC derivatives, CDS & CDO contracts).
This sub-fund is actively managed and is compared to the risk benchmark as described in Appendix 2 for performance and risk level indicator purposes. However, the reference to this index does not constitute any objective or limitation in the management and composition of the portfolio and the sub-fund does not restrain its universe to the index components.
The index does not evaluate or include its constituents on the basis of environmental and/or social characteristics and is therefore not aligned with the ESG characteristics promoted by the sub-fund.
Therefore, returns may deviate materially from the performance of the reference index.
