Key investment opportunities: CT Responsible Global Equity Fund

Key investment opportunities: CT Responsible Global Equity Fund

Launched in 1987, the CT Responsible Global Equity fund aims to provide capital growth while driving positive change in society and the environment.

Launched in 1987, the CT Responsible Global Equity fund aims to provide capital growth while driving positive change in society and the environment. Read more from Portfolio Manager, Nick Henderson, on the investment opportunities and the long-term impact of COVID-19.

Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors, your investment process and the make-up of the investment team?

Launched in 1987, Responsible Global Equity fund aims to provide capital growth while driving positive change in society and the environment. We orientate investment decisions around our Avoid, Invest, Improve philosophy, which underpins all our ESG-focused offerings. Quite simply this means we exclude companies perceived harmful to people and the planet; harness long-term sustainable opportunities by investing in companies we perceive as market leaders within several megatrends such as energy transition and health & wellbeing; and use our position of influence to engage with companies around improving their management of ESG issues, and exercising our voting rights where necessary to drive further positive change.

It’s not enough to state our ambition of doing good – we need to monitor and measure the impact of our investments. Each year we publish an impact report for the fund, to provide analysis on how the products and services provided by companies we invest in for this portfolio align with the sustainable development goals (SDGs) – both positively and negatively; key portfolio impact metrics on carbon, water and gender; and a summary of our engagement with portfolio companies, and how this aligned with the SDGs.

Our Global Equities team is responsible for stock picking and day-to-day portfolio management. We draw on Columbia Threadneedle Investments entire active equities expertise, including specialists in developed and emerging markets. Throughout the process, we work alongside our Responsible Investment team – 21 sustainability experts with 275 years of collective experience – to ensure that ESG-related factors are hardwired into our company analysis and engagement.

Can you identify a couple of key investment opportunities for your fund you are playing at the moment in the portfolio? This could be at a stock, sector or thematic level

As governments and companies gear up to achieve the Paris Climate Agreement goals, we see growing opportunities within the energy transition space – the pathway towards transforming the waywe generate and use energy. That means ashift from fossil-fuels to zero-carbon sources, and increasing theefficiency with which energy is used.

Transport is another key part of this transition. With the cost of rechargeable batteries falling, companies and consumers are increasingly turning to electrification for transportation, making the transition to electric vehicles one of the largest potential areas for electrification. Companies providing battery materials are one area we have focused on– for example, we believe Belgium’s Umicore looks well placed for the structural change towards electric vehicles.

Until all electricity is completely decarbonised, improving the rate of energy efficiency remains critical to tackling climate change. We therefore also see opportunities in industrial gas companies, which can help global industrial customers reduce emissions. Linde work with their customer base to reduce aggregate carbon emissions through a more efficient production process. They are also part of the energy transition drive, through the production of hydrogen as an alternative zero-carbon fuel source powering end markets, from building heat and power to transportation.

How have you been trying to weather the storm caused by the Covid-19 pandemic and what could be the longer-term implications for your strategy?

No one could have predicted the impact borne on society and the economy by Covid-19. That said, our natural long-term bias towards quality businesses with strong competitive positioning, strong balance sheets and high visibility of earnings stood the portfolio in good stead through 2020.

We believe that potential outperformance over the long term is to be found not simply in companies addressing sustainability challenges, but from those high-quality businesses addressing sustainability challenges: those with strong competitive positioning are able to consistently capitalise upon those opportunities, rather than see their market leadership dissipate through increasing competition. Our focus on quality helped drive relative outperformance last year, as these companies garnered increased investor attention as market participants anchored to those best positioned to weather the uncertainty.

Looking forward, whilst in the short term we are witnessing a value rotation as investors look to profit from the ‘reopen’ trade, we remain focused on the longer term. Covid-19 has brought sustainability challenges to the fore – not just environmental, but societal too, from physical health, labour standards, and mental wellbeing. It will take time for these challenges to be addressed, but over the long term, the opportunities should create a robust risk/reward payoff.

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Risk warnings

The value of investments and any income from them can go down as well as up and investors may not get back the original amount invested. Past performance should not be seen as an indication of future performance. All fund performance data is net of management fees. Screening out sectors or companies may result in less diversification and hence more volatility in investment values.

The information provided in the marketing material does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in the Funds.

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Important information: Past performance is no guide to future returns. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk. Threadneedle Specialist Investments Funds ICVC (“TSIF”) is an open-ended investment company structured as an umbrella company, incorporated in England and Wales, authorised and regulated in the UK by the Financial Conduct Authority (FCA) as a UCITS scheme. Certain sub-funds of TSIF are registered for public offer in Austria, Belgium, Chile, Denmark, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Singapore, Spain, Switzerland, Sweden and the UK. Shares in the Funds may not be offered to the public in any other country and this document must not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation. Please read the Prospectus before investing. Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the `Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus), Swedish (for the Key Investor Information Document only) and can be obtained free of charge on request from: Columbia Threadneedle Investments PO Box 10033, Chelmsford, Essex CM99 2AL. Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com

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