EDENTREE RESPONSIBLE AND SUSTAINABLE EUROPEAN EQUITY A

Investment Process

The EdenTree investment process combines both Fundamental analysis and Responsible/Sustainable assessments. It begins with the fund managers and the Socially Responsible Investment team (SRI) generating ideas through thematic research, analysis, and company visits. The SRI team then uses both positive and negative screens to assess a potential holding’s sustainable and responsible strengths and weaknesses. On the negative “Avoiding Harm” side the SRI team use a 10% turnover threshold to prevent significant exposure to sectors such as alcohol, gambling, pornography, tobacco, weapons, intensive farming, animal testing for cosmetic or household products and oppressive regimes. On the positive side it looks for good corporate citizens meeting EdenTree’s “Nine Pillars” of Responsible Investing. This includes Business Ethics such as product quality and company conduct; Community encompassing apprenticeships and training; Corporate Governance, Labour, Environmental Management, Human Rights, Education, Health and Urban Regeneration. The construction of the portfolio and financial analysis – looking at areas such as free cashflow, dividend, balance sheet, management quality and valuation – is the responsibility of the management team. They target businesses that are out of favour but intrinsically sound, and where a change in circumstance or economic conditions will bring about a recovery both in company fundamentals and improved investor sentiment. This should then lead to superior returns.