This page provides sustainability-related information about the Asset Allocation Fund (the “Sub-Fund”), pursuant to Article 10 of the Sustainable Finance Disclosure Regulation (the “SFDR”).
The SFDR is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability claims made by financial market participants.
| Name: AUM Total Return Umbrella Fund SICAV plc – Asset Allocation Fund | Legal entity identifier: 213800D3UR21RSJ1LU81 |
| Does this financial product have a sustainable investment objective? | |
| ☐ Yes | ☒ No |
| ☐ It will make a minimum of sustainable investments with an environmental objective: ___% ☐ in economic activities that qualify as environmentally sustainable under the EU Taxonomy ☐ in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy ☐ It will make a minimum of sustainable investments with a social objective: __% | ☐ It promotes Environmental/Social (E/S) characteristics and while it does not have as its objective a sustainable investment, it will have a minimum proportion of __% of sustainable investments ☐ with an environmental objective in economic activities that qualify as environmentally sustainable under the EU Taxonomy ☐ with an environmental objective in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy ☐ with a social objective ☒ It promotes E/S characteristics, but will not make any sustainable investments. |
A. Summary
The Sub-Fund promotes environmental and social characteristics in accordance with Article 8 of the SFDR.
In its implementation of the Sub-Fund’s Environmental, Social and Governance (ESG) strategy, the Investment Manager favours issuers with good ESG profiles, as captured by its ESG methodology.
The Sub-Fund’s environmental or social characteristics are assessed both quantitatively and qualitatively, by means of sustainability indicators as well as of the Investment Manager’s research process to determine a company’s profile on ESG issues. This includes the use of third-party ESG ratings and/or scores and other data which may be received directly from the investment counterparties. As part of its investment decision making process, the Sub-Fund’s ESG strategy also uses other criteria for the selection of underlying assets, namely the exclusion of certain controversial activities and sectors, as far as practicable and in line with the Investment Objectives of the Sub-Fund.
B. No sustainable investment objective
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
However, the Sub-Fund’s portfolio is monitored regularly and an ESG score is maintained internally with the goal of having a significant percentage allocated to sustainable investments. The Investment Manager targets a score above 50% for this purpose.
What are the objectives of the sustainable investments that the financial product partially intends to make and how does the sustainable investment contribute to such objectives?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
How do the sustainable investments that the financial product partially intends to make, not cause significant harm to any environmental or social sustainable investment objective?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
How have the indicators for adverse impacts on sustainability factors been taken into account?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
Are the sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
C. Environmental or social characteristics of the financial product
What are the environmental or social characteristics promoted by this financial product?
The Sub-Fund promotes positive impact by investing in funds and/or directly in Companies which promote climate change mitigation, climate change adaptation, and/or social impact.
The promotion of a positive impact in these areas results in the Sub-Fund promoting various environmental and/or social characteristics.
D. Investment strategy
What investment strategy does this financial product follow and how is the strategy implemented in the investment process on a continuous basis?
The Sub-Fund seeks to generate consistent risk-adjusted as well as absolute returns for well-informed investors over a five (5) year to ten (10) year period. The Sub-Fund’s investments will consist of investments across a wide range of asset classes as further detailed in the offering documentation which may be obtained from the Investment Manager. The Sub-Fund complies with the investment restrictions detailed in said documentation and ensures that the Sub-Fund’s portfolio is sufficiently diversified. If, however, in exceptional circumstances, these restrictions are exceeded, the Investment Manager shall, as soon as practicable and taking into account the interests of investors, take all such steps necessary to comply with restrictions as detailed in the offering documentation.
What are the binding elements of the investment strategy used to select the investments to attain each of the environmental or social characteristics promoted by this financial product?
Environmental, social and governance (“ESG”) factors may also be integrated into the investment process through the use of third-party ESG ratings published on third-party service provider platforms, primarily Morningstar’s Sustainalytics ESG Risk Ratings (for the avoidance of doubt, such service providers provide ratings only and full discretion in asset selection is retained by the Investment Manager).
The Investment Manager may also exclude investment, including equity in companies, related or connected with controversial activities and sectors, such as arms manufacturing (controversial and conventional weapons), manufacture of tobacco, hard spirits, explicit and illicit publications and productions, fossil fuels and gambling.
Therefore, as part of the Investment Manager’s in-depth analysis of potential investments, the Investment Manager examines the overall composite ESG ranking of the shortlisted companies, as published on platforms supported by third-party service. The Investment Manager views companies in the bottom third of rankings as less favourable and thus reduces their weighting, or will consider selling the position, in the overall portfolio. Conversely, companies in the top third of ESG rankings would typically have an upwards adjustment in the portfolio, subject to the restrictions set out in the offering documentation and the internal policies and procedures of the Sub-Fund and Investment Manager.
What is the policy to assess good governance practices of the investee companies?
The Investment Manager’s ESG Policy.
Is there a commitment to reduce by a minimum rate the scope of investments considered prior to the application of the strategy? (Including an indication of the rate)
The Sub-Fund does not commit to reduce the scope of investments prior to application of that investment strategy.
Does this financial product consider principal adverse impacts on sustainability factors?
☐ Yes
☒ No
E. Proportion of investments
What is the planned asset allocation for this financial product?
The Sub-Fund targets a minimum of 50% investments that are aligned with the environmental or social characteristics promoted by the Sub-Fund.
The Sub-Fund targets to hold a maximum of 50% investments that are not aligned with the environmental or social characteristics promoted by the Sub-Fund and are not sustainable investments, and which fall into the “Other” section of the Sub-Fund (further details of which are set out below).
How does the use of derivatives attain the environmental or social characteristics promoted by the financial product?
While the Sub-Fund may use derivatives for investment and hedging purposes, it will not use derivatives to promote environmental or social characteristics.
What is the minimum share of investments with an environmental objective aligned with the EU Taxonomy? (including what the minimum share of transitional and enabling activities is)
The minimum proportion of the Sub-Fund’s investments that contribute to environmentally sustainable economic activities for the purposes of the Taxonomy Regulation will be 0%. The lack of a formal minimum requirement should not be taken as meaning that the Sub-Fund will not be investing in such investments at any given time. In other words, it cannot be excluded that some of the Sub-Fund’s holdings qualify as Taxonomy-aligned investments. Disclosures and reporting on Taxonomy alignment will develop as the EU framework evolves and data is made available by issuers. There is no minimum share of investments in transitional and enabling activities.
What is the minimum share of sustainable investments with an environmental objective that are not aligned with the EU Taxonomy?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
What is the minimum share of sustainable investments with a social objective?
The Sub-Fund promotes environmental or social characteristics but does not have sustainable investment as its objective.
What investments are included under “#2 Other”, what is their purpose and are there any minimum environmental or social safeguards?
The investments included under “#2 Other” are investments in cash, derivatives, Article 6 funds and funds not classified under EU SFDR. According to the data available to the Sub-Fund, such funds do not invest in “controversial activities and sectors”.
F. Monitoring of environmental or social characteristics
What sustainability indicators are used to measure the attainment of the environmental or social characteristics promoted by this financial product?
The sustainability indicators used to measure the attainment of each environmental or social characteristic promoted by the Sub-Fund are:
- the proportion of the Sub-Fund held in sustainable investments as defined by the Investment Manager’s sustainable investments methodology; and
- the Sub-Fund’s portfolio Environmental, Social and Governance (ESG) score, which targets a score above 50%.
How are the environmental or social characteristics and the sustainability indicators monitored throughout the lifecycle of the financial product and the related internal/external control mechanism?
The environmental or social characteristics and the sustainability indicators are monitored in the initial acquisition phase and holding period. Once investments have been made, ongoing monitoring is performed.
The Investment Manager conducts reviews to ensure ongoing compliance with the policies and analyses the investments exposure at a portfolio level for possible adverse impact. The Investment Manager is responsible for the correct execution of the ESG due diligence activities.
G. Methodologies
What is the methodology to measure the attainment of the environmental or social characteristics promoted by the financial product using the sustainability indicators?
The Sub-Fund measures the attainment of the environmental or social characteristics by using on an ongoing basis the sustainability indicators mentioned under the section “F. Monitoring of environmental or social characteristics”.
The Sub-Fund relies on the following criteria:
- ESG Ratings / Scores
The ESG rating methodology is described under the section “D. Investment Strategy”.
- Positive outcomes (sustainable investments)
In addition to the environmental and social characteristics promoted, the Sub-Fund promotes positive outcomes by holding sustainable investments with environmental and social objectives.
H. Data sources and processing
What are the data sources used to attain each of the environmental or social characteristics including the measures taken to ensure data quality, how data is processed and the proportion of data that is estimated?
- Data sources
The primary source of ESG research is derived from third-party ESG scoring data providers and independent research portals like MSCI, Morningstar Sustainalytics and Goldman Sachs Marquee.
- Data processing
Data is processed internally by the Investment Manager’s research analyst/s and portfolio manager/s, supplemented by external data providers.
- Estimated data
Though data availability presents a challenge due to limited company disclosures, the proportion of data that is estimated is minor and can vary by metric. The Investment Manager’s primary source of data, by industry, is derived from the Investment Manager’s research analyst/s and portfolio manager/s, supplemented by external data providers. Data availability and estimation from external providers ranges from low availability (e.g. water/hazardous waste) through to high availability but with estimates (e.g. carbon emissions with ~25% estimated).
I. Limitations to methodologies and data
What are the limitations to the methodologies and data sources? (Including how such limitations do not affect the attainment of the environmental or social characteristics and the actions taken to address such limitations)
- Limitation to the methodology
Inherent limitations to the methodology exist. In addition to analyst and portfolio manager analysis and engagement discussions, the methodology is built on and supported by external data points that are developed within the limitation of the data sources and company provided information.
- Limitation to the data sources
The major challenge is the data availability for certain ESG factors – for which the Investment Manager may seek to engage directly with the companies to address the lack of disclosure or seek from third-party ESG vendors.
J. Due diligence
What is the due diligence carried out on the underlying assets and what are the internal and external controls in place?
The Sub-Fund carries out due diligence on the underlying assets in the investment process on a regular basis as described under the section “F. Monitoring of environmental or social characteristics”.
K. Engagement policies
Is engagement part of the environmental or social investment strategy?
☐ Yes
☒ No
If so, what are the engagement policies? (Including any management procedures applicable to sustainability-related controversies in investee companies)
n/a
L. Designated reference benchmark
Has a reference benchmark been designated for the purpose of attaining these characteristics promoted by the financial product?
☐ Yes
☒ No