Demand from the institutional investor segment is steadily increasing – DNB, Global SRI Fund with impressive value development
11 April 2014. Sustainability is more than just a buzzword: DNB Asset Management has been making investments based on social, ethical and environmental criteria since 1998. SRI principles are applied not only for its own product spectrum, but also throughout the entire company as part of a holistic sustainability strategy. This not only includes all company activities, but also larger topics such as corporate governance, environmental protection and work ethics. Since the beginning of this year, DNB has been a member of Forum Nachhaltige Geldanlagen (FNG), the professional association for sustainable financial investments in Germany, Austria and Switzerland. ‘This is a decisive step that aligns our sustainable corporate philosophy with the sales direction in the core German-speaking markets,’ says Mike Judith, co-head of sales at DNB Asset Management, on the decision to join. DNB has proved that sustainability and performance are not mutually exclusive through a globally invested equity fund that has enjoyed the confidence of its investors for more than two decades and that will again exceed the annual benchmark by 3.6%.
Usually, economic goals are at odds with environmental and social interests. This is not the case at DNB Asset Management. The investment expert brings together financial and non-financial goals in a procedural manner. Its independent SRI analysts are experts in socially responsible investments (SRI) and operate in advance of the investment process. The analysts continuously monitor the capital market, regularly collect data and analyse the companies within the global investment universe. The work of the portfolio managers, who can concentrate completely on the analysis of the securities, does not begin until after the investment spectrum has been assessed.
Uncooperative companies will be excluded
The SRI platform, based on social, ethical and environmental guidelines, guarantees that the fund will not invest in companies affected by the defined exclusion criteria. This means, for example, that producers of weapons of mass destruction, tobacco or pornography are automatically excluded. Corruption, the violation of human and worker rights and environmental pollution will also not be tolerated. If a company arouses suspicions of such actions, DNB will exercise its right as a shareholder, attempt to enter into dialogue with the respective company and make appropriate suggestions. If a company avoids this dialogue and finds a constructive solution, it will be removed from the investment universe until such time as adequate measures has been taken to improve its situation.
Mike Judith is well aware that every investor defines sustainability differently and thus pours different content into it. Not only is the number of sustainable providers, and thus the corresponding labels and studies, increasing, but also the demand from the institutional side. ‘For a long time, institutions have considered SRI part of risk management,’ says Judith, imposing a large responsibility upon the investment sector. It should first concretely define sustainable investment, then implement it with the degree of transparency required and, if desired by the investor, then provide additional criteria. CEO Torkild Varran says: ‘Our customers expect us to act responsibly and remain far away from ethically dubious investments.’
Strict internal standards
DNB also applies sustainable standards to all of its business fields, as proven by its inclusion in the Dow Jones Sustainability World Index. This is based on the guidelines of the UN Global Compact, which includes ten globally accepted principles in the areas of human rights, the environment and anticorruption. The OECD principles for multinational companies are also mandatory. They comprise responsible action with regard to employee and human rights, and environmental concerns. DNB became a signatory to the UN PRI in 2006.
DNB divides its sustainability goals into three groups: governance, society and environment. DNB reports on its sustainable orientation and ambitions in its annual CSR report and in a quarterly newsletter produced by Asset Management in order to inform investors about the activities of the SRI analysts in a timely fashion. In doing so, the successful measures of the ‘active commitment’ are reported, as well as the current company acquisitions; after all, in Mike Judith’s opinion, transparency is a mandatory part of sustainable action and business.
DNB Global SRI with pleasing performance
DNB places a great deal of importance on the transparency of its funds and discloses their portfolios on the company website (www.dnb.no/lu/de). DNB Global SRI (ISIN LU0029375739) currently features a portfolio of some 100 stocks in various sectors that are individually looked after by industry specialists. Its top positions currently include technology stocks such as Samsung, Apple and Oracle, as well as Johnson & Johnson, Novartis and Citigroup. The fund was floated in September 1990 and has developed positively over the last five years with 16.2% annual growth. The fund again delivered 14.3% growth this year and is thus 3.6% over its benchmark index (MSCI World AC Index Net).
Banks and technologies preferred
For the current year, Widar Kirkeby, portfolio manager and head of global equities, sees banks and technologies assessed attractively. The profits have developed positively and the cash flows are continuously expanded; the current capital structure can also already be seen as stable. In terms of technologies, increased corporate investments in the infrastructure can be assumed. With regard to currency instabilities and political crises such as that in Ukraine, DNB is predicting certain market weaknesses in the near future. For the overall year, however, a growth in profits is expected due to the financial recovery in Europe and the USA.
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