INTERNATIONAL - Fundsmith, the asset management company run by British stock-picker Terry Smith, yesterday said it was launching a fund to tap growing demand from institutional clients in sustainable investment.
The fund is the third to be launched since Smith set up the company in 2010, following a 36-year career which included a stint as chief executive of interdealer broker Tullet Prebon.
The move into sustainable investing for Fundsmith, which manages £13.5billion (R251.88bn), follows growing demand from institutions such as pension schemes and insurance companies to focus on the sustainability of returns.
The Fundsmith Sustainable Equity Fund will also avoid investing in pornography, tobacco, aerospace, defence, brewers, casinos, gas and electric utilities, metals and mining, oil and gas, it said.
While an increasing numbers of funds are being launched aiming to pick stocks based on environmental, social and governance-related characteristics, Fundsmith said that it would also look at policies and practice on research and development, product innovation, dividend policy and capital investment plans.
“We have long felt that many investors who apply the commonly used factors to identify sustainable investments do so at the expense of the long-term economic sustainability of a business,” Smith said.
“By marrying important sector exclusions with the proven sustainable investment process of Fundsmith, we have shown that we can deliver superior investment performance.”
The launch of the fund follows three years in which the company had used the same process to run money for British charity Comic Relief, during which it returned an annualised performance of 23.9percent, it said.
The fund will be open to institutional investors with a minimum investment of £5million and carry an annual management fee of 0.9percent. Smith and partners will invest more than £10m into the fund, it said. The company has launched its flagship Fundsmith Equity Fund in 2010 with £25m in seed money.
It has since grown to total £11.9bn in assets, much of it invested on behalf of retail investors.