Future Earth

Strategy highlights

: Enables investors to gain targeted exposure to companies worldwide which offer innovative solutions to help address environmental challenges

Long-term thematic research identifies drivers of change, providing a framework for idea generation

Stock selection driven by bottom-up proprietary research which incorporates consideration of environmental, social and governance (ESG) risks, issues and opportunities

Our philosophy and process

Themes seek to identify the major areas of structural change in the world. This structural change can be political, economic, social, technological, or environmental; its impact will manifest across traditional economic sectors, and will be significant in magnitude and long-term in duration. Themes are a critical element of our idea-generation process and, alongside evaluation of fundamentals and ESG considerations, constitute a key component of our valuation of securities.

For the Future Earth strategy, a significant area of structural change is environmental change. We seek to identify companies that are proactively contributing to an overall shift towards an operating model that will help protect the Earth’s environment and natural resources.

Our sustainable ‘red lines’ are built on a combination of exclusions that effectively avoid investments in security issuers involved in or that generate a material proportion of revenues from areas of activity that we deem to be harmful from a social and/or environmental perspective.

Strategy profile

Objective: The strategy aims to achieve long-term capital growth by predominantly gaining exposure to companies located worldwide which provide products, services and solutions that contribute towards reducing environmental and natural resource pressures on our Earth.
Performance benchmark: MSCI AC World NDR
Typical number of equity holdings: 30-50
Strategy inception: January 2021

Investment team

: Our Future Earth strategy is managed by a team with a wide range of backgrounds. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, ESG, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

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Paul Byrne

Quantitative analyst and portfolio manager, quantitative equity team

Philip Shucksmith

Portfolio manager, Real Return team

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Newton will make investment decisions that are not based solely on ESG considerations. Other attributes of an investment may outweigh ESG considerations when making investment decisions. The way that ESG and sustainability considerations are assessed and the assessment of their suitability for Newton’s sustainable strategies may vary depending on the asset class and strategy involved. For Newton’s sustainable strategies, ESG reviews are performed prior to investment for corporate investments (single name equity and fixed income securities). The analysis will then also follow the Newton sustainable investment process to ensure it fits with the wider Newton sustainable investment philosophy.

Key investment risks

: Objective/performance risk: There is no guarantee that the strategy will achieve its objectives.

Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.

Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Strategy can lose significantly more than the amount it has invested in derivatives.

Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.

Emerging markets risk: Emerging Markets have additional risks due to less-developed market practices.

Shanghai-Hong Kong Stock Connect and/or the Shenzhen-Hong Kong Stock Connect (‘Stock Connect’) Risk: The strategy may invest in China A shares through Stock Connect programmes. These may be subject to regulatory changes and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.

Environmental, social and governance (ESG) investment approach risk: This strategy can be considered to follow an ESG investment approach or incorporate elements of an ESG investment approach, which may cause it to perform differently than other strategies that have a similar objective but which do not integrate an ESG investment approach (or elements thereof) when selecting securities. In addition, in following an ESG investment approach, the strategy is dependent upon information and data from third parties (which may include providers for research reports, screenings, ratings and/or analysis such as index providers and consultants). Such information or data may be incomplete, inaccurate or inconsistent.

Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.