Our philosophy and process

  • The portfolio is global and diversified, supported by thorough fundamental analysis. Environmental, social and governance (ESG) considerations are integrated throughout the research process and via proprietary quality reviews, to ensure that any material issues are captured.
  • The Fund combines Newton’s global investment management experience with an understanding of charities’ ethical requirements.

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use a range of global investment themes to capture these.

Investment team

The Newton SRI Fund for Charities is managed by an experienced team. Our global sector analysts and investment managers are located on a single floor in London, which helps to ensure that the investment process is flexible and opportunistic. Guided by our global investment themes, the team works together to identify opportunities and risks through research and debate.

25
years' average investment experience

Transcript

Performance commentary
So it’s been a busy summer period again, the market’s been focused on trade tensions and escalating geopolitical tensions, in particular trade wars with China. Closer to home, we’ve seen Brexit negotiations and worries about a ‘no-deal’ resolution; alongside that we’ve seen interest rates rising due to inflation pressures coming through. In this background the US market’s been a strong performer, led by the technology sector; more cyclical European markets have been a little bit more muted; and emerging markets have been weak due to dollar strength.

In that environment, the Fund has produced a positive performance and actually beat its comparative index. So key drivers of performance this quarter have been our overweight to the technology sector, in particular Microsoft has benefited from its cloud revenue business, which has actually been very, very strong, and we’ve also had exposure to the battery manufacturer Samsung SDI, which has benefited from the key trends that we’re seeing in the automotive industry, namely companies having to move towards a more electrified fleet due to regulations around CO2 emissions.

One of the key areas where performance has lagged has been in the semiconductor market, reason being that the market’s been worried about short-term cyclical activity. We think actually the long-term structural play and demand for semiconductors continues to be very, very strong due to automation, the rise in artificial intelligence, and moves towards renewable energy.

Activity review
In terms of activity, what we’ve done is we’ve actually reduced some of the top performers in the portfolio; we’ve started reducing the technology weighting within the portfolio and actually recycling that into areas that have underperformed. So we’ve started to increase our financials exposure, which has been a laggard this year; we’ve increased our exposure to the health-care sector – we’ve introduced a position in Merck, the pharmaceutical company: it has a large cancer franchise and one of its key drugs Keytruda has recently won approval for lung cancer and is well positioned to take advantage of that over the next year or so, as it has first-mover advantage.

Investment strategy and outlook
In terms of outlook, we think actually in the near term, the market’s going to be focused on continuing trade tensions, negotiations around Brexit, potential tariffs and trade wars around China and the impact of that. We think that’s going to drive short-term sentiment in markets. However, we think actually what is more important is what’s happening in terms of monetary policy. We’ve gone through a very long period where interest rates have remained low, but we’re starting to see them rise and we think that’s going to be a key driver for markets going forward. Within this environment, we want to focus on companies where we think expectations – growth expectations in particular – can be met; we’re looking for companies with strong balance sheets and good free cash flows with strong thematic backing.

Strategy profile

Objective

To optimise the total return (being a combination of capital growth and income) for charity investors, through a global and balanced portfolio, screened against negative socially responsible investment criteria. The Fund is actively managed, investing in equities and fixed interest securities on a global basis with the aim of providing a balance between capital growth and income.

 

Literature

Application form
Prospectus
Fund screening criteria
Annual report
Sterling Income KIID
Sterling Accumulation KIID
X Net Accumulation KIID

Char SRI Fund for Charities factsheet

Factsheet

Facts and commentary for the past quarter's fund and market performance.


Char SRI Fund for Charities brochure

Brochure

More detail on the strategy's investment approach.

Performance

 

Sep 2013 to
Sep 2014
Sep 2014 to
Sep 2015
Sep 2015 to
Sep 2016
Sep 2016 to
Sep 2017
Sep 2017 to
Sep 2018
Fund return8.3820.19.69.1
Comparative
index
8.21.420.89.57.9

 

Source: Newton, Datastream, 30 September 2018, Sterling Income share class (ISIN: GB00B4VV6B25). Fund performance calculated as total return including reinvested income net of UK tax and charges, based on net asset value. All figures are in GBP terms. The impact of an initial charge (currently not applied) can be material on the performance of your investment. Further information is available upon request. A composite of 20% FTSE Government All Stocks, 37.5% FTSE All Share, 37.5% FTSE World (ex UK) and 5% GBP 7-day cash is used as a comparative index for this Fund. The Fund does not aim to replicate either the composition or the performance of the comparative index.

Past performance is not a guide to future performance. Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Newton is not a tax expert and independent tax advice should be sought. You should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found on this page.

Key investment risks

 

  • Objective/performance risk: There is no guarantee that the Fund will achieve its objectives.
  • Currency risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
  • Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the Fund.
  • Credit risk: The issuer of a security held by the Fund may not pay income or repay capital to the Fund when due.
  • Charges to capital: The Fund takes its charges from the capital of the Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.
  • Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss