Interview of Jeremy Genin, Chief Investment Officer in charge of ESG initiative within Monaco Asset Management.
Monaco Asset Management (MAM) is a leading independent wealth management company for private and institutional clients founded in the Principality in 1999, with more than $3bn AUM (in 2019).
Since 2019, MAM has launched its Impact Investing Initiative, “for greater communication and implementation of their commitment to ESG initiatives”.
Last September 2020, Jeremy Genin, Chief Investment Officer in charge of ESG initiative within MAM, introduced to us the first initiative dedicated to Impact Investing in Monaco. Few months later, we were interested to know more about the evolution of their ESG investment strategy and certainly about the MAM positive impact fund.
MAM Positive Impact Fund
At Monaco Asset Management we have long thought about our duty to bridge the SDG financing gap by being able to offer investment advice in ESG and Impact investing.
We have been offering and managing 100% ESG investment mandates since Q4 2019. This mandate replicates the asset allocation carefully researched internally and ensures that all underlying investments are ESG or Impact Investing focused.
In order to expand on this effort, and to allow a broader reach of our offering, we are in the midst of launching the same strategy in a Luxembourg fund format; the “MAM Positive Impact Fund”. The fund is intended to launch in February 2021 and will fully replicate the ESG/Impact Investing mandate.
By Q1 2021, the AuM in ESG and Impact Investing should reach close to $60m. This growth took place in just over a year. While this is still small relative to the firm wide AuM of US$3bn, we will continue to allocate significant resources to the promising strategy.
Changes in ESG understanding/demand from clients
The 100% ESG investment mandate and the MAM Positive Impact Fund are seeing considerable interest from a variety of clients, individuals and corporates. While climate change risk understanding has been rising over the last few years, the Covid pandemic has certainly accelerated awareness. There is a realisation that we cannot only rely on Government action to address existential issues such as climate change. It is down to all of us to participate in a collective action.
As such, it also comes down to how capital is morally allocated. That said, investors are worried about the recent explosion in ESG product offering. Concerns are mounting that some investment products are not entirely truthful about their ESG characteristics and Impact. This is legitimate.
During our research, we have come across a number of ESG investment products which misrepresented their characteristics. It comes down to careful analysis and selection. We spend a significant amount of time reviewing each investment we select. Each investment has to demonstrate clear ESG and impact characteristics. We also use third-party data to validate our research findings.
MAM ESG strategy
Our ESG strategy is fairly comprehensive. While the traditional method of exclusion (i.e., avoiding investing in certain sectors such as Gambling and Defense stocks) has a lot of merit, we also like to focus our effort on allocating capital to funds that invest in companies that provide a solution to societal issues. This is called Impact investing. One step further, we also support funds that take an activist approach to investing; working hand in hand with Management teams to improve their company’s ESG policies. The strength of our strategy is its ability to allocate capital in a way to maximise return and impact while aiming to keep a low level of volatility.
ESG Performances in 2020
2020 has been a challenging year no doubt. However, it was also a useful year to find out which fund manager truly has a differentiated investment process. As mentioned previously, our motivation to drive change has led us to invest in ESG activist funds.
One such fund is called Impactive Capital, managed by Lauren Taylor Wolfe. We had the pleasure of hosting Lauren during the MAM Impact Conference in September 2020 during which she detailed her strategy and portfolio. It is a concentrated portfolio of companies. The team at Impactive works together with each Management team to address some key ESG issues at the company level ranging from gender equality to environmental improvements, and better governance.
We like the fact that allocating capital to such funds provides comfort that this capital is driving actual societal change. In 2020, the Impactive Capital fund performed well at c. +25%. We are encouraged by this and will continue monitoring this fund strategy as well as its peers. Please note, reference to the aforementioned fund should not be considered investment advice.
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