AGF Global Sustainable Growth Equity Strategy

Approach
Fundamental, bottom up approach.
Cap
Mid-Large Cap
Benchmark
MSCI World Net Index
Inception Date
December 1991
Resources

Key Reasons to Invest

1

Provides investors with access to high-growth global opportunities in environmental themes focused on energy and power technologies, waste management and pollution control, water and waste water solutions, and health and well-being.

2

For investors seeking to capitalize on the world's transition to a sustainable economy through access to companies offering solutions to key sustainability issues.

3

For investors who desire a disciplined, responsible investing strategy with the potential benefits of global diversification.

Overview

Strategy

A disciplined, fundamental bottom-up approach to responsible and sustainable investing from an experienced Sustainable Investment team. The Strategy is focused on companies categorized within four major themes: Energy and Power Technologies, Waste Management and Pollution Control, Water and Wastewater Solutions, Health and Well-being. These four themes map into 14 subthemes, which provide the strategy with an opportunity universe of approximately 1,000 companies. The strategy owns between 45 to 60 companies with turnover expected to approximate historic levels of 25% to 35%. As long-term investors, we believe we are in the early innings of innovation and societal demand. Our process remains focused on actively seizing upon inefficiencies in pricing and industry dynamics.

Philosophy

We believe companies focused on innovative products and services that simultaneously improve quality of life and environmental circumstances are being increasingly rewarded by investors. We also believe that sustainable technologies represent a faster-growing opportunity set in the market. Our sustainable investment specialist team has defined high-growth environmental themes which have been further honed through collaboration with the additional research teams from the AGF Global Equity analyst pool and shared firm research. We believe that industries evolve according to powerful themes and remain GICS-agnostic in our approach, investing in companies offering solutions to key issues of sustainability. The result is a high-active share portfolio that we believe enhances our ability to capitalize on inefficiencies in this segment of the market.

Process

The investment process is based on a fundamental bottom-up approach. Four environmental mega themes are used to establish the investment universe. Within this universe, the team seeks out opportunities that either provide exposure to high-growth environmental themes or catalysts or that have been identified within the undervalued segments of a particular industry's value chain. Typically, the catalyst is technology or product-related and is a definable environmental advantage, or the catalyst is expected to have an impact within 18 months. Idea generation efforts are focused on two areas: fundamental strength and free cash flow.

Fundamental strength is examined from the perspective of proprietary long-term competitive advantages, which can take one of several forms:

Technological advantage:

  • Unique solution or product

Process advantage:

  • Ability to make a product or provide a service faster, cheaper or more efficiently Distribution advantage: reach and efficiency of distribution network

Strength of brand:

  • Higher quality, premium-priced products

Once a list of candidates is identified, the team conducts a comprehensive assessment of the security's future performance potential. This process includes discussions with company management, to develop a deeper understanding of its business strategy and the stability of its business model.

Using internal and third party research, the portfolio manager assesses security valuation by determining the underlying financial quality, profitability, balance sheet strength, earnings quality and cash flow.

Our portfolio construction process is driven by our bottom-up security selection process.

Our portfolios represent the portfolio manager's best ideas and reflect conviction on a security and sector level.

Investment Process

Universe
  • Energy & Power Technologies
  • Waste Management & Pollution Control
  • Water & Waste Water Solutions
  • Health & Well-Being
  • Top Down Themes:
    • Universe of +1,000 companies mapped along 4 macro themes providing long-term secular growth
    • Further classification of sub-themes provide actionable “sleeves”
  • 1. Screening
    • Short list of candidates are selected based on growth characteristics and balance sheet fundamentals
    • Themes are assessed for relative strength, providing an indication of relative attractiveness versus the benchmark
  • 2. Fundamental Analysis
    • Companies well positioned in attractive themes are analyzed using the following steps:
      • Stage Appropriate Company Analysis
      • Value Chain Assessment
      • ESG Criteria Assessment
  • 3. Portfolio Construction
    • Exposure:
      • Exposure across value chain and stage development
      • Continual monitoring of fundamentals, ESG performance and thematic timeliness
    • Stock Weights:
      • Positions in the portfolio are scaled to conviction levels and stage of company – high conviction mature companies may be maintained at a max 5% weight
Portfolio
  • 45 – 60 names

Investment Team

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