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GLOBAL ENVIRONMENTAL ENTERPRISES FUND Passive Funds

ALL YOUR QUESTIONS ANSWERED.

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This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied upon by private investors or any other persons.

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GLOBAL ENVIRONMENTAL ENTERPRISES FUND

Q. Is this an ethical fund? A. No. First and foremost the Global Environmental Enterprises Fund

(GLEE) is a global growth fund. This is about generating long-term returns from a structural shift in the global economy. Of course a by-product of this fund is that these companies are helping the transition to a lower carbon economy.

Q. Why is this a global growth fund? A. The fund aims to profit from the long-term global megatrends that Robert Dowling Fund Manager • Robert and the index team use a pragmatic replication style in the management of the Global Environmental Enterprises Fund. Leveraging our size and position to obtain cost savings, the team looks to minimise transaction costs by cross trading with other funds in the group when possible. • Robert manages a number of other international equity index portfolios. He joined Legal & General Investment Management’s index funds team in April 2010. Prior to this, he was at State Street Global Advisors (SSgA) where he was a fund manager for five years specialising in Pacific and Global Emerging Markets. • Robert is a CFA Charterholder and a member of the CFA Society of the UK; he is also a member of the FTSE Asia Pacific Regional Committee.

are driving the need for greater resource and energy efficiency, vital for the transition to a lower carbon global economy:

• A rapidly growing and increasingly wealthy global population • Dwindling natural resources • A changing global climate Our fund will invest in companies that are profiting from finding efficient solutions to the problems posed by these megatrends on a global scale, providing a long-term investment opportunity with huge potential.

Q. What are environmental enterprises? A. Fantastic investment opportunities are being created by innovative companies that understand these trends and provide goods, products and services that exploit the challenges of a changing world. The three core themes that best capture the investment potential of a resource-constrained world are: • Energy efficiency; • Low carbon energy production; and • Water, waste and pollution control. Environmental enterprises are those companies developing either more efficient everyday products and services or innovative solutions within these sectors. These companies present a significant and rapidly growing market.

Q. Why have you opted for a passive mandate instead of an active fund? A. Actively managed funds tend to have a bias to certain industry sectors or geographical regions in which the fund manager has expertise. We have opted to launch a passive fund as we believe that this is the best means of achieving a truly global portfolio of stocks that provide broad exposure across various industry sectors.

Q. Why did Legal & General choose the Osmosis Climate Solutions Index as the basis for this passive mandate? A. We have chosen the Osmosis Climate Solutions Index as the basis of GLEE as its innovative stock selection process provides a broad exposure to companies that are engaged in helping to find more efficient solutions to environmental issues globally. We believe this gives the fund access to some of world’s best and most innovative efficiency players in the environmental space, while helping to mitigate some of the stock specific risks involved in investing in environmental technology companies.

GLOBAL ENVIRONMENTAL ENTERPRISES FUND

Q. Who is Osmosis Investment Management? A. Founded in 2008, Osmosis Investment Management is a specialist asset

manager and independent index provider with a deep understanding of environmental factors and how they impact investment portfolios. Osmosis is a member of both the Institutional Investors Group on Climate Change (IIGCC) and the UK Sustainable Investment and Finance group (UKSIF), which promote responsible investment and other forms of finance that support sustainable development, enhance quality of life and safeguard the environment.

Q. How do Legal & General and Osmosis work together? A. A representative from Legal & General sits on Osmosis’ index

committee, helping to monitor and assess the rebalancing of the index as well as periodically evaluating any need for changes to sector or sub-sector classifications.

Q. What’s different about the Osmosis Climate Solutions Index? A. What distinguishes the index is its broad exposure to companies that

are focusing on energy efficiency; water and waste management; pollution control and renewable energy. The index is weighted according to industry sector, split equally between the key themes of energy efficiency; low carbon energy production; and water, waste and pollution control – three areas that are vital to the transition to a lower carbon global economy. This is the most important aspect of the index as it enables our fund to achieve a broad, flexible and truly global portfolio of companies.

Q. How do companies qualify for inclusion within the index? A. Companies are only included in the index if they have more than 50% of

their revenues coming from activities under one of the key themes. This is an essential screen to ensure that the portfolio only includes companies whose share price is determined principally by their low carbon products and services. The great majority of companies that participate in the low carbon space do so as a sideline to their main revenue generating activities and therefore do not have share prices that are driven by the transition to a low carbon economy.

Q. There is an efficiency theme running through the portfolio. Is efficiency a key driver for the fund? A. The fund is not exclusively about efficiency, but the transition to low carbon

is strongly related to how we will satisfy the increasing energy and resource requirements of a growing and wealthier global population, so efficiency plays a key role.

Q. Is there a geographical distinction between what regions have to offer in this field? A. The current exposure reflects the global transition to a low carbon economy. We do not target geography in determining either the investment universe or the portfolio itself. Geographic diversity is a by-product of the screening process. The portfolio is free to dynamically evolve in line with the growth in its key themes.

There are, however, some identifiable trends, which is why we have opted for a global fund. In Europe, the major players are mostly about renewable energy, the UK mostly offers water companies while North America is focused on innovation – things like smart grids or energy efficiencies. Asia offers a mix of renewable energy and businesses targeting energy efficiencies.

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GLOBAL ENVIRONMENTAL ENTERPRISES FUND

Q. Change in this industry is quite rapid as developments take technologies and services in new directions, how do you keep up? A. The portfolio is designed to evolve as the market evolves. A good

example is marine energy. Companies involved in marine energy may at some point be a good addition to the portfolio; however, it’s currently challenging to find a listed company that has 50% of revenues derived from this activity. As soon as marine energy companies are able to meet the qualification criteria, these companies could become eligible for inclusion in our hydroelectric, marine and geothermal sub-sector.

Q. Why are there caps on individual stocks of 2.5% at rebalance and a cap on the sub themes of 10% at rebalance? A. Maximum and minimum constraints are placed on the portfolio to

ensure that no individual sector, sub-sector or company is either over or under represented at rebalance. Again, the aim is a diversified exposure to the key themes.

TO FIND OUT MORE.

0845 070 8684 [email protected] www.landginvestments.com Investments of this type and any income from them may rise and fall in value and are not guaranteed. This fund invests in companies in this specialist area. In addition, some of these will be smaller companies or companies from emerging markets. This means that this fund is higher risk than other more general equity funds. This fund invests overseas and changes in exchange rates between currencies may cause the value of your investment and the level of income to fall as well as rise. Lines are open Monday to Friday, 9am to 5pm. Call charges will vary. We may record and monitor calls. Legal & General (Unit Trust Managers) Limited. Registered in England number: 1009418. Registered office: One Coleman Street, London EC2R 5AA. Authorised and regulated by the Financial Services Authority. H122383 14/06/12 CW2252