Investment Objective
To provide long-term capital appreciation by employing equity oriented non-traditional or alternatives strategies and techniques that primarily take long positions in Sustainable Companies or companies that demonstrate improving sustainable characteristics and short positions in companies that are deemed overvalued, using derivatives where appropriate. Sustainable Companies are those that the Investment Manager believes to have effective governance and superior management of environmental and social issues (sustainable characteristics) based on its ESG scoring methodology.
Latest Meeting Note
Meeting 28 May 2020
The JP Morgan Sustainable Long/Short Strategy launched in February 2020 with the bulk of the seed provided by JP Morgan. The fund targets equity like returns (c. 7-10% per annum) but with less than two thirds of the MSCI World volatility... Read more
The JP Morgan Sustainable Long/Short Strategy launched in February 2020 with the bulk of the seed provided by JP Morgan. The fund targets equity like returns (c. 7-10% per annum) but with less than two thirds of the MSCI World volatility. JP Morgan have structured this product to create a portfolio of underling strategies with the aim of earning strong risk-adjusted returns through investing in long-term global sustainability trends. The overall process looks to combine investing in companies that will benefit from long-term sustainable trends, with the evaluation of material non-financial factors to manage risk and identify alpha opportunities. This is run alongside an exclusion overlay, which exclude sectors, companies or practices to ensure portfolio alignment with client objectives and industry best practices. This is combined with a short book that looks to profit from the ‘losers’ of the structural impacts of the identified sustainable trends. Shorting is also used as a portfolio tool to de-risk industry exposure and reduce volatility. During the due diligence process, JP Morgan undertook an extensive and wide-cast search process to select the underlying managers for the fund, looking to discover a mix of generalists, sector and industry specialists, ultimately creating a shortlist of 5-10 managers. The current mix includes managers focusing on; global infrastructure & utilities, European ELS & event-driven, global consumer-related companies, and healthcare and related sub-sectors, to name a few examples. To enhance returns, the underlying managers are able to submit a proposal to ‘supersize’ positions within the overall portfolio where they see a particularly attractive upside, and these proposals must pass a 3 step process (high conviction, pass an ESG threshold, sustainable theme alignment), to be given the go ahead by JP Morgan. The portfolio will typically run 40-80% net long, on a typical gross of 130-200%. Top positions will be limited to 10%, with the top 5 unable to exceed 35% of the fund, with core holdings around 3-6%.
Performance
| JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 0.8 | 0.8 | 0.0 | 0.5 | 0.1 | 0.0 | 0.5 | 0.2 | 0.3 | 0.7 | 0.3 | 0.9 | 0.7 | |
| 2018 | 0.1 | 0.9 | 0.2 | 0.6 | 0.7 | 0.1 | 0.4 | 0.9 | 0.2 | 0.6 | 0.4 | 0.9 | 0.1 |
