River and Mercantile (R&M) is launching two sustainable equity funds with seed capital from multi-asset investment provider Quilter Investors, via its Cirilium Active portfolios.
Each will comply with a different Sustainable Financial Disclosure Regulation (SFDR).
The Article 9 compliant R&M European Change for Better Fund will be managed by James Sym (pictured) who was promoted to head of equities in May 2022.
Article 9 refers to a fund that has sustainable investment as its objective or a reduction in carbon emissions as its objective.
The Article 8 compliant R&M Global Sustainable Opportunities Fund will be managed by William Lough, who is currently lead portfolio manager on R&M’s UK Dynamic Equity and International High Alpha Strategies and co-manager on the Global High Alpha Strategy.
Article 8 refers to a fund which promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
Both strategies will follow R&M’s Sustainable-PVT (S-PVT) investment philosophy, which incorporates sustainability into the team’s long-established process, looking at Potential, Valuation and Timing.
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Avoiding the typical ESG ‘darlings’
Paul Craig, portfolio manager of Quilter Investors’ Cirilium Active range, said: “These new funds represent a great diversification opportunity for our clients. We are impressed by R&M’s differentiated approach to sustainable investing which avoids the typical ESG ‘darlings’, and consequently offers a strong alpha-generating opportunity. We have been a supporter of R&M for a number of years and are pleased to extend this successful relationship.”
Simon Smith, head of UK wholesale distribution at R&M, added: “Paul and the Quilter team have been extremely supportive of the funds’ sustainable objectives and we’re delighted that our proactive philosophy clearly resonates with investors. We believe our truly differentiated approach will generate returns and improve wealth through responsible investment that actively promotes positive societal and environmental change.”
Sym said: “We want 2022 to be remembered as the year that the asset management industry started doing ESG properly. We will be investing in companies which we expect to make a big improvement in their carbon footprint, as well as those companies which enable this improvement for others. This fits well with our contrarian and valuation-orientated mindset. We are looking to buy tomorrow’s ESG stars at yesterday’s valuations.”
