Momentum Harmony Global Sustainable Equity Fund An ESG Integrated, Direct Equity portfolio

The Momentum Sustainable Global Equity fund wants to “invest ethically without compromising on performance”.

By integrating sustainability parameters alongside fundamental characteristics, Momentum manage to deliver a portfolio that looks more attractive than benchmark on both valuation, quality and momentum dimensions, as well as with better environmental footprint and ESG risk. This is Momentums' key to deliver long-term outperformance, whilst also investing ethically (on average).

Momentum don’t exclude stocks just because companies have high carbon emissions or waste generation because at all times sustainability characteristics (be it environmental footprint, ESG risks, impact to Sustainable Development Goals etc…) are traded off against fundamental characteristics (valuation, quality, momentum of the stocks). So, if a company is attractive enough on its fundamentals, Momentum will buy despite having higher carbon emissions, for instance. So, everything else being equal, if stock A is as attractive as stock B but has lower environmental footprint, Momentum prefer stock A. Similarly, if stock A and stock B have same environmental footprint, but stock B is more attractive on its fundamentals, Momentum prefer that to stock A.

The only things Momentum never buy, no matter how attractive they can be, are companies deriving significant revenues from coal, weapons, tobacco and palm oil, or those having a significantly negative impact on any of the 17 SDGs set out by the UN (for example, a company that has behaved really badly against human rights, or poverty etc…). Everything else is fair game, including mining (as long as it’s not coal miners).

The long-term expectation for this fund is to deliver a small but positive outperformance over the long-run, net of fees. This is meant to be a core portfolio solution, so it will rarely deviate hugely from its benchmark, and Momentum aim to deliver a stable value add over time. Since inception of the UCITS fund (in May 2020), Momentum have delivered +14.7% p.a., well ahead of the peer group median return of +11.0% and ahead of benchmark as well.

Looking at the portfolio today, compared to its benchmark, it’s got: 50% lower carbon emissions, 25% lower waste generation and 77% lower water usage. According to Morningstar, the fund ranks top 18% of global equity funds ranked on environmental, social and governance risk.