UK funds invest $650m in Trump detention camps

St James’s Place (SJP), Neptune and Aviva Investors are among asset managers with $657.7m in three companies connected with US detention camps holding immigrants and their children.

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One asset manager cited its environmental, social and governance (ESG) approach when questioned about why it held a company exposed to the camps, while others stated the funds were run by third-party managers in a sub-advised mandate.

Portfolio Adviser has already reported Blackrock and Vanguard are among the largest shareholders in General Dynamics, while Natixis and Pyrford have high conviction positions in the contractor, which has been linked to Donald Trump’s child separation policy.

Natixis Vaughan Nelson US Select Equity, which is Luxembourg domiciled, has increased its allocation to the company since June from 4.5% to 5%. The French asset manager would not comment on its increased allocation.

However, as the US president arrives in the UK for the first time during his presidency, further figures from Morningstar Direct reveal just how exposed UK-domiciled funds are to Trump’s zero-tolerance immigration policies.

In total $635.4m is held in General Dynamics in UK-domiciled funds.

US funds

SJP holds 2.6% via its £211.9m North American fund. Neptune also had substantial exposure in its US Opportunities, Quarterly Income, US Income, Global Income and Global Alpha funds based on data from the end of 2017.

The company said now only the £243.9m US Opportunities, run by Ali Unwin, and £33.3m US Income funds, run by George Boyd-Bowman, have exposure and this has been reduced to a “very small exposure” of 2.17% and 1.68% respectively.

SLI North American holds 1.7%.

General Dynamics provides technical and administrative assistance for the processing of immigrants. Defence secretary Jim Mattis served on the board between 2013 and 2017 but stepped down to join the Trump administration.

Prison operators

UK-domiciled funds also have exposure to private prison operators The Geo Group and CoreCivic, which have contracts connected to the detention of immigrants.

The Geo Group runs 11 immigration centres and made political contributions to Trump. According to filings made to the US Senate and House of Representatives, the company has lobbied Washington on the operation and management of prison and detention facilities.

Aviva Investors has the highest conviction stakes in the company via its US Equity Income and US Equity Income II funds, which hold 1.34% and 1.6% respectively. The £870.4m Artemis Monthly Distribution fund, run by Jacob de Tusch-Lec and James Foster, holds a 0.53% stake.

In total, UK-domiciled funds hold $19.5m in the company.

CoreCivic runs eight immigration detention centres. The company is held by 20 UK-domiciled funds via minority stakes, averaging a couple of basis points each. The holdings collectively represent $2.8m.

ESG justification

SJP and Aviva Investors said the funds exposed were sub-advised mandates run by third parties in the US. They therefore would not comment on the portfolio holdings.

The SJP North American fund is run by Aristotle Capital Management and the Aviva funds are run by River Road Asset Management.

Artemis did not respond to Portfolio Adviser’s request for comment.

However, a spokesperson from Aberdeen Standard Investments responded: “As active investors, it is our policy to engage with investee companies on material ESG issues.”

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