FFG GLOBAL FLEXIBLE SUSTAINABLE
This is a marketing communication. Please refer to the FFG Fund prospectus and the KID on www.fundsforgood.eu before making any final investment decision. This document does not constitute any contractual document or investment advice.
BLI – Banque de Luxembourg Investments S.A., is a management company wholly owned by Banque de Luxembourg, itself owned by the CMCIC group. Initially founded in 2005, BLI – Banque de Luxembourg Investments S.A. manages more than 19 billion Euro
Guy Wagner – CIO of Banque de Luxembourg Investments S.A., conceived and launched the strategy in 2005 within BLI Banque de Luxembourg Investments S.A. His strategy has been applied since 2017 in the FFG Global Flexible Sustainable.
Formed in 2021 from the merger of DMS, MontLake and MDO, Waystone has over 20 years of experience in providing institutional governance, risk and compliance services to the asset management industry. Waystone is now a leading player in the industry.
INVESTMENT OBJECTIVES & POLICY
The objective of the fund is to seek a return over the medium term that is higher than that of a Euro bond investment. For this purpose, the Fund is invested in equities, bonds, money market instruments or cash. It may also invest in precious metals exchange traded commodities and other collective investment schemes up to a maximum of 10%. The weighting of these different asset classes can vary significantly over time. The fund is invested without geographical, sectoral or currency restrictions. The fund is actively managed without regard to a benchmark.
|Launch of the strategy||28/12/2017|
|Type of fund||Multi-Assets|
|MANCO||Waystone Management Company (Lux)|
|Manager||BLI – Banque de Luxembourg Investment s.a.|
|Custodian Bank||Banque de Luxembourg|
|Country of registration||BE, LU, FR, ES|
|Minimum investissement||1 unit|
|Duration of the fund||Unlimited|
RESPONSIBLE INVESTMENT POLICY
The fund is categorised as a financial product with a sustainable investment objective as defined in Article 9 of the SFDR as well as contributing to a reduction in carbon emissions in order to achieve the long-term global warming limitation targets set by the Paris Agreement. This implies that the issuers of the securities held by the sub-fund meet certain sustainability criteria* defined by Funds for Good in its “Responsible Investment Policy”, which is a three-tiered corporate social responsibility policy defined and monitored by Funds for Good SA. This policy includes a) excluding a range of issuers from the investment universe, either because they are or have been subject to serious sustainability controversies (human rights abuses, environmental scandals, gross corruption, serious violations of basic ethical standards) or because the economic activities from which they derive their revenues could have negative effects on sustainability factors. These economic activities include, among others, the design, production, maintenance or trade of weapons, the production of tobacco products, the extraction of thermal coal or non-conventional oil and gas. b) The portfolio is constructed to achieve, for equity investments, a carbon footprint at least 20% lower than a representative equity universe used by the manager for the composition of the equity portfolio, and an increase in the social quality of the companies compared to this same universe. c) At the governance level, both the manager and the distribution coordinator are signatories to the United Nations Principles for Responsible Investment (UNPRI) and a voting rights policy is implemented. The voting rights are exercised by the fund manager. Funds For Good’s “Responsible Investment Policy” and the exclusion list are available at www.fundsforgood.eu
The fund has been awarded the “Towards Sustainability” label, an initiative to which Funds For Good is also a signatory. The Towards Sustainability label aims to ensure that labelled products meet a minimum level of sustainability, as measured by the Towards Sustainability quality standard, and to provide relevant and useful information that allows you to determine whether a specific product policy is in line with your personal values.
The achievement of this label by the fund is valid for a limited period of time and is subject to reassessment. Furthermore, the achievement of the label by the fund does not mean that it meets your own sustainability objectives, nor does it mean that it meets the requirements of future national or European regulations. For more information on this subject, see www.fsma.be/fr/finance-durable.
The sustainability criteria are certified by the “Towards Sustainability” label. The assessment of the sustainability criteria is carried out by the fund manager, BLIBanque de Luxembourg Investments s.a.
Risk & reward indicator: 4.
The risk & reward indicator is 4, as the value of the share may move moderately and therefore the risk of loss and the opportunity for gain may be moderate. Historical data, such as that used to calculate this indicator, may not be a reliable indication of the future risk profile of the fund. There is no guarantee that the risk indicator will remain unchanged, so it may change over time.
What does the synthetic risk & reward indicator represent?
Expressed on a scale from 1 (low risk with potentially lower return) to 7 (high risk with potentially higher return), the risk & reward indicator prescribed by law is determined on the basis of the fund’s volatility or sensitivity to the market. It reflects the fact that investments made in this sub-fund are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate can rise and fall and investors may not recover their initial investment. The sub-fund described above involves a risk of capital loss. The repayment of the initial investment is not guaranteed. The lowest category is not a risk-free investment. This risk indicator is also included in the “Key Investor Information” document. The figure is calculated for an investor in euros.
Which important risks are not adequately addressed by the synthetic indicator?
• Investing in shares involves counterparty risk in the sense that the issuing company may go bankrupt. This entails the risk of a significant or even total loss of the value of the investment made in these securities.
• The investment by the sub-fund in emerging markets is exposed to the risk of political, regulatory, financial or fiscal instabilities or uncertainties which may adversely affect the value of such investments or even call into question the sub-fund’s ownership rights.
• Investment in debt securities involves a credit risk in that the issuer may refuse or be unable to meet all or part of the interest or principal payments on its securities. This entails the risk of a significant or even total loss of the value of the investment made in these securities.
• The use of derivatives that are not listed on a stock exchange or traded on another regulated market (“OTC instruments”) entails a counterparty risk in the sense that the counterparties to these derivatives may at some point be unable to meet all or part of their obligations to the sub-fund.
• The use of equity index futures is intended to mitigate but not eliminate equity market risk.
• Investments in China are sensitive to any political, social and diplomatic events that may occur in China or affect China. Investors’ attention is drawn to the fact that any change in China’s policy could have a negative impact on the securities markets in China as well as on the performance of the Fund
There may be other risk factors which an investor should consider in light of their personal circumstances and particular present and future circumstances. Further information on the risks of investing in the Fund is set out in the Key Investor Information Document and in the relevant section of the Fund’s prospectus, which is available from the Management Company and on the website www.waystone.com
INFORMATION ON SUSTAINABILITY
This sub-fund promotes environmental and social characteristics and, although it does not have a sustainable investment objective, it will contain a minimum of 30% sustainable investments. On average, 50%-60% of the net assets of the sub-fund will be invested in sustainable investments.
In its equity portfolio, the sub-fund will mostly invest in shares of companies aligned with the Paris agreement on climate change, whose objective is to keep the increase in global average temperature well below 2°C above pre-industrial levels, and preferably to limit the increase to 1.5°C, by the end of the 21st century.
The whole portfolio (equity and fixed income investments) will be invested in corporate and sovereign issuers that comply with certain international human and labor rights standards and are not materially involved in controversial activities. The fund will also prioritize virtuous companies in terms of environmental, social and governance issues. Finally, the investment in this Sub-Fund allows, indirectly and through the Distribution Coordinator, Funds For Good, to promote the creation of jobs to fight against poverty.
b. No sustainable investment objective
This sub-fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.
Adverse impact indicators are being selected and monitored on an ongoing basis by the Investment Manager. The Investment Manager applies an internal model for monitoring principal adverse impact (PAIs) and compliance with good governance principles that allows for the identification of potential significant detriments of a sustainable investment on other investments of the fund. In particular, the manager excludes from its investment universe companies that present very severe controversies in terms of governance.
Sustainable Investments are aligned with OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
c. Environmental or social characteristics of the financial product
Carbon reduction: This sub-fund will focus on companies whose carbon emissions profile is aligned with the Paris agreement on climate change and will seek to keep the carbon intensity of the portfolio below a pre-defined level.
Compliance with international human and labor rights standards: This Sub-Fund will only invest in securities issued by companies that comply with international human rights, labor, environmental and anti-corruption principles, standards or frameworks.
Exclusion of controversial activities: This Portfolio will only invest in securities issued by companies that are not materially involved in economic activities considered harmful, such as (but not limited to) the manufacture and trade of arms, tobacco or coal.
Prioritization of environmentally, socially and governance virtuous companie: Issuing companies must have a minimum ESG score as calculated by MSCI. This score covers all three dimensions of ESG and gives an indication of how a given issuer compares to other issuers in terms of ESG risk. The imposition of a minimum ESG score avoids investing in companies that could result in significant ESG risk to the sub-fund. In addition, companies with the worst labor management records will be excluded from this sub-fund.
Promoting job creation to fight poverty: In addition to the environmental and social characteristics promoted by the Portfolio through its investments, investing in this Portfolio indirectly generates a concrete social impact through Funds For Good, the distribution coordinator of the SICAV. After deducting its operating expenses, Funds For Good donates the greater of 50% of its net profits or 10% of its revenues to the social project it has created and manages, “Funds For Good Impact”. “Funds for Good Impact” dedicates all of its financial resources to the fight against poverty by promoting job creation. “Funds for Good Impact” grants interest-free, unsecured loans to people in precarious employment situations who have a business project. This financial support (coupled with human support in the form of coaching) enables these entrepreneurs to create their own business. More information is also available at www.fundsforgood.eu.
d. Investment strategy
The Fund will invest at least 30% of its net assets in “sustainable assets”, i.e. financial securities (stocks and/or bonds) issued by companies that are aligned with the Paris Climate Agreement, whose objective is to keep the increase in global average temperature well below 2°C compared to pre-industrial levels, and preferably to limit the increase to 1.5°C, by the end of the 21st century. The minimum sustainable investment objective applies to all net assets of the fund. It is possible that the entirety of the sustainable investments will be made solely through the stocks or bonds held by the sub-fund.
In addition, the Compartment applies a “thematic” strategy through which the overall carbon footprint of the Compartment will be reduced. To this end, the investment made by the sub-fund will ensure that the carbon intensity level (scope 1 + scope 2) of the entire portfolio of corporate securities is at least 50% lower than the average carbon intensity level of a reference index representative of the fund’s investment universe.
The sub-fund also applies an “exclusion” strategy, whereby issuers of financial securities are excluded from the investment universe if they do not comply with certain international standards, and/or are involved in controversial activities beyond a pre-defined materiality threshold, or if they are in the bottom 5% of its investment universe in terms of Labor Management Score. This strategy is also based on an exclusion list of issuers (companies and/or states) in which the Sub-Fund may not invest.
The sub-fund also applies a “best-in-universe” strategy, selecting only issuers with a minimum ESG score (as calculated by MSCI) depending on the investment universe in which the issuer is located. Two universes are distinguished here: the universe of companies from developed countries, and the universe of companies from emerging countries.
e. Proportion of investments
The Sub-Fund promotes environmental characteristics and will contain a minimum of 30% of sustainable investments with an environmental objective in economic activities that are not considered environmentally sustainable under the EU taxonomy.
All corporate and sovereign investments made by the Fund will be aligned with the environmental and social characteristics promoted by the Fund. Where one or more stocks in the investment universe monitored by the Investment Manager are not covered by the ESG data providers, the Investment Manager is allowed to invest in such stocks provided that the total weight of the non-covered stocks in the portfolio does not exceed 10% of the assets of the Sub-Fund, and provided that such asset meets all other economic and social characteristics promoted by the Sub-Fund.
Therefore, the Sub-Fund will contain a maximum proportion of 70% of investments aligned with the environmental or social characteristics promoted by the sub-fund that are not considered sustainable investments
Cash and investments for hedging purposes will not be aligned with the environmental and social characteristics promoted by the Sub-Fund. The weight of these investments in the portfolio is not limited by the investment policy.
f. Monitoring of environmental or social characteristics
The Investment Manager monitors the overall environmental or social characteristics on a regular basis, and at least monthly. The environmental and social characteristics are controlled for before each investment and on a regular basis after the investment.
The sustainable investment objective promoted by the Fund’s investments is to contribute to the Paris Agreement’s long-term temperature goal of keeping the increase in global average temperature well below 2°C above pre-industrial levels, and preferably limiting the increase to 1.5°C, by the end of the 21st century. Any company that meets at least one of the following three criteria is considered to contribute to the sustainable investment goal:
1) The company’s current carbon intensity is consistent with a global temperature increase kept below 2°C by the end of the century.
2) The company’s current carbon intensity is not yet compatible with a global temperature increase below 2°C by the end of the century, but the company has set emissions reduction targets that have been endorsed by the Science Based Targets (SBTi) initiative, meaning that these targets are considered compatible with the Paris Agreement’s 2°C or below goal. These emission reduction targets set by this initiative are independently verified.
3) The company’s current carbon intensity is not yet consistent with a global temperature increase kept below 2°C by the end of the century, but the company’s annual emissions reductions (scope 1 and 2) are consistent with those required for the current year to achieve net zero emissions by mid-century and limit the global temperature increase to below 2°C by the end of the century.
Compliance with international human rights and labor standards and the exclusion of controversial activities are monitored on the basis of financial and non-financial information published by the portfolio companies or by third-party data providers.
h. Data sources and processing
Before an investment is done, the Investment Manager uses MSCI and Bloomberg as data provider, non fiancial third-party data provided by the Coordinator of distribution, financial reporting from the investee companies, research reports from brokers and publicly available data to perform the necessary ESG assessment.
The Investment Manager and the Coordinator of distribution ensure to have the respective license to obtain ESG data from the mentioned external data providers. The exact proportion of data which is estimated by third party data providers is complex to calculate, may vary depending on the data provider, but is expected to be decreasing over time.
i. Limitations to methodologies and data
ESG data coverage doesn’t typically cover the investment manager’s full investment universe of stocks. In addition to this, estimations are often used and even when data is available, there are cases where methodologies of data calculation are open to interpretation and therefore debatable. Despite these limitations the data received and ultimately processed are robust and can be relied upon sufficiently to be utilized within the investment process.
Neither the Investment Manager, the Management Company nor the Distribution Coordinator can assume any responsibility for the accuracy of the valuation by external data providers and the accuracy, including completeness, of the analyses prepared by third party providers. The Investment Manager, the Management Company and the Distribution Coordinator have no influence over any disruptions or limitations (e.g. due to estimates) in the analysis and preparation of research by third party providers.
j. Due diligence
The Investment Manager monitors and analyses regularly the financial and non-financial performance of the portfolio companies, including the environmental, social and governance related risks and/or opportunities based on the mentioned external data provider and additional documentation of the underlying portfolio companies.
k. Engagement policies
The investment manager uses the opportunity to meet the management of companies as part of its active investment process and as a key element in its stewardship oversight of client assets. In the event that dialogue with the companies fails, or if the measure proves necessary and judicious for other reasons, BLI reserves the right to submit resolutions to the AGMs in the best interest of the investors and the desired impact. The investment manager condutcs individual engagement via the manager himself and/or by the SRI team but can take part into collaborative engagement as well.