R&M Global Sustainable Opportunities
R&M Global Sustainable Opportunities is a high-conviction, value-orientated fund that invests in companies of all sizes. It offers a real alternative to the average global sustainable fund, which usually comes with a large-cap growth style tilt. The fund’s favoured area is finding undervalued quality businesses. Its key sustainability objective is aligning with net zero by 2050.
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Will graduated with a First-Class Honours Degree in Modern History from the University of Oxford. He joined RAMAM as an equity analyst in 2009, became Director of Research in 2013, and in 2014, was appointed alternate Portfolio Manager for Hugh Sergeant’s Recovery and High Alpha strategies. Will now leads the UK Dynamic Equity and Global Sustainable Opportunities Strategies and co-manages the Global High Alpha Strategy.
Hugh graduated in Economics from the London School of Economics and began his career at Gartmore in 1987 as a UK equities graduate trainee. He moved to Phillips & Drew in 1990, where he managed UK equities for twelve years and became Head of Smaller Companies in 1997. At UBS Global Asset Management, he was Head of UK Equities and Chairman of the UK Equities Committee from 2000. Hugh joined Societe Generale Asset Management in 2002 as Head of UK Equities and manager of the Growth strategy. A founding member of RAMAM since 2006, he now leads Value and Recovery PVT Equities, managing the UK Equity High Alpha, UK Recovery, and Global Recovery strategies, and co-manages the Global High Alpha strategy.
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Company Description
River Global is the bringing together of AssetCo’s River and Mercantile, Saracen Fund Managers, SVM Asset Management and Indian specialist Ocean Dial Asset Management under one brand in December 2023. They offer a focused range of long only equity products with a pragmatic, sometimes contrarian house view; as a result, a number of funds tilt towards value investing.
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Investment process
This fund follows the classic R&M PVT (Potential, Value & Timing) philosophy and process. The philosophy looks to profit from companies at different stages in their life cycles. The potential investment universe is categorised into four different buckets; growth, quality, recovery and asset-backed. The R&M proprietary screening tool (MoneyPenny), systematically scores and ranks companies on PVT within each of these four categories.
The initial screen helps provide ideas and narrow the universe for further fundamental research, whereby the team digs into the business and its market. Ideas are then debated to identify blind spots and understand why a stock may be underpriced.
The team believes there are two consistent market inefficiencies to exploit: ‘Beat the fade’ and ‘positive inflection’. Beat the fade refers to those businesses which can earn high returns sustainably for a longer period than the market expects. These ideas will come from the growth and quality buckets highlighted by MoneyPenny. Positive Inflection refers to businesses where profits and sentiment are depressed but there is reason to believe they will recover. These ideas will come from the recovery and asset-backed screens.
Once the companies have gone through the S-PVT internal scoring system (see more below) the best stocks will go into the portfolio.
Risk
The fund typically holds around 50 stocks. The fund is limited to +/- 10% in different industry sectors except for energy, materials, and utilities, where the fund is allowed a maximum aggregate total of 20%. Regional allocation is also flexible, with a +/-25% range. The fund is carefully monitored to ensure diversification and prevent any single theme from dominating the portfolio.
ESG
ESG - Explicit
This fund focuses on impact in the real world, rather than ratings or ESG ‘box-ticking’. The team believes there is an arbitrage opportunity from doing proper sustainable research rather than relying on overly simplistic third-party ratings. The three main areas of focus are people, innovation, and the environment. The team has its own internal scoring system called S-PVT. Each potential stock idea is ranked between S1 and S4.
S1 – Clear winner. Leader in its field or clear sustainability tail winds.
S2 – Solid sustainability fundamentals
S3 – Some issues but potential to improve and some evidence this has started
S4 – Clear ESG issues and/or little evidence of improvement
50-80% of the portfolio will be in S1 and S2 names. 20-50% will be in S3. S4 names are excluded from the portfolio. Engagement is a critical part of the fund’s process and most of these efforts are focused on S3 companies. Following engagement, the company’s progress is closely monitored. The fund publishes a quarterly report to update investors on its sustainability efforts. This includes information such as carbon emissions, sustainability risks and recent voting and engagement.
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