Ninety One UK Sustainable Equity added to Wealth Shortlist

The Ninety One UK Sustainable Equity fund was added to the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential on 15 May 2023.

The fund aims to provide growth in capital and income over the long term while investing in companies it believes are making a positive impact on society or the environment. The fund’s positive impact approach makes it different to other funds in the IA UK All Companies sector, and to other responsible UK equity funds. We think the fund could be a good option for the UK portion of a responsible investment portfolio.

Matt Evans joined Ninety One in 2017 and has managed the fund since its launch in December 2018. The structure of investment teams at Ninety One means that Evans collaborates and engages in debate with other UK investors, as well as with members of the sustainable investment team on company analysis. We think this adds rigour and contributes to a positive investment environment. Evans has over 24 years of investment experience, having previously managed funds at Colombia Threadneedle and Legal & General.

Evans wants to invest in companies he believes are making a positive contribution to society, the environment or both. The first step in identifying these businesses is excluding those whose activities result in significant negative impacts. Ninety One exclude companies directly involved in the manufacture and production of controversial weapons from their funds and to narrow the investable universe of UK stocks, some exclusions are applied at the fund level too. This rules out companies in sectors like tobacco, oil & gas and coal. Violators of the UN Global Compact principles (a UN pact on human rights, labour, the environment and anti-corruption) are also excluded.

Evans then assesses companies across three pillars. A financial sustainability assessment digs into balance sheet strength, tests the quality of earnings and allows him to form a view on the management’s track record of allocating capital efficiently.

Next up is an internal sustainability assessment. Evans assesses the environmental and social impact of a company’s operations. The key areas of focus will differ depending on the type of business being analysed but can stretch from its carbon footprint and usage of resources like water, to its employee working conditions. The manager thinks that this analysis helps to identify businesses that are run sustainably, manage their negative impacts well and are aligned with the long-term interests of its key stakeholders.

The final step is an assessment of any positive impact the company makes. This aids in quantifying the impact that financing a company’s products or services makes to the environment, society or both. Evans assesses this positive impact by mapping it to the UN Sustainable Development Goals (SDGs) to target attractive sustainability outcomes.

This process whittles down the universe to a portfolio of 30-50 holdings, with its largest investments in the industrials, health care and financials sectors. The fund currently has only one overseas holding and Evans doesn’t tend to make use of the flexibility to invest up to 20% of the fund overseas, so we expect this fund to retain its UK focus. The manager has the flexibility to invest in derivatives which, if used, adds risk.

We think Evans is a committed and passionate sustainable investor and has the experience and resources at Ninety One to do a good job for patient investors over the long term. Past performance isn’t a guide to the future. Funds will rise and fall in value, so investors could get back less than they invest.

We’ve also published a full fund update to go alongside this notification.

Read full NinetyOne UK Sustainable Equity fund update

Past performance is not a guide to the future. Source: Lipper IM to 30/04/2023. *N/A – performance information not available.

More on Ninety One UK Sustainable Equity, including charges

Ninety One UK Sustainable Equity Key Investor Information