ESG

Our investment process is designed to help deliver superior risk-adjusted returns for clients. The assessment of opportunities and risk is embedded into the entire investment process and ESG integration occur at multiple stages:

• Strategic asset allocation (SAA): the focus here is to determine long term weights to various asset classes within the context of a well-diversified portfolio, based on an assessment of a client’s investment objectives and risk profile. This is an iterative process and TMI is open to helping clients formulate investment policies and mandates that reflect their beliefs and values. For some clients, the integration of ESG into the mandate formulation process is an explicit requirement. This may take the form of broad sustainability considerations or more explicit ethical investment restrictions which may include negative screening.
   
• Tactical asset allocation (TAA): this encompasses various ways through which we seek to add value to the risk-adjusted performance of the SAA over the economic cycle. Where appropriate, ESG and broader sustainability related risks and opportunities are considered alongside traditional economic and financial analysis by the investment team in reaching tactical investment decisions.
   
• Stock selection: independent fundamental research is carried out by asset-class research teams. Our focus is on identifying long term opportunities to add value to client portfolios through the analysis of risk and return potential of securities across various asset classes. We believe that ESG issues represent important sources of risk and therefore can have a material impact on prospective returns. Our asset-class research teams participate in regular research meetings where new stock ideas are discussed and existing stocks on the ‘recommended list’ are reviewed. Investment decisions are made only after both financial and non-financial risk factors have been assessed. All client portfolios can only hold securities that have been put on a ‘recommended list’ by one of our asset class research teams. As afore-mentioned, virtually all of our assets under management are managed in bespoke accounts. Where a client has expressed explicit ESG requirements in their investment mandate, these specific requirements become an additional layer of analysis that we conduct. Unless otherwise agreed with a client, only securities on our ‘recommended lists’ which also meet the client-specific parameters can be held in a client’s portfolio. Further details on the research processes employed by each of TMI’s asset class research teams can be made available to clients upon request.
   
• Portfolio construction: being predominantly top-down investors, TMI seeks to execute investment decisions in the most efficient, cost-effective way. Typically, this means that we use exchange-traded funds (ETFs) extensively across various asset classes. Where ETFs are used, we assess ESG/ethical ETFs alongside conventional ETFs.