IM|Power recently teamed up with SharingAlpha to present the 2020 Wisdom of the Selector awards, which gave an opportunity to celebrate leading ESG funds, driving new standards and delivering alpha across a variety of categories. We interviewed each of the winners to find out what makes their funds stand out and how they’ve protected investments against recent market volatility. You can see the full list of winners and runners up here.
Following the Echiquier Positive Impact European Fund's win in the European ESG Equities category, we spoke to the people behind the scenes, Luc Olivier, La Financière de l'Echiquier (LFDE) to find out more about the services and products they offer.
Tell us, what makes your fund stand out compared with your peers?
Echiquier Positive Impact Europe is one of the first European impact fund investing in listed equities. It seeks financial performance alongside with positive environmental and social impact by investing in European responsible companies. It relies on a proprietary methodology to assess ESG and an innovative scoring of companies' impact profiles. Thanks to voting and direct discussions with companies, we are truly committed to shareholder engagement. We publish every year an Impact Report to communicate on each concrete social and environmental impact of the companies invested. And finally, the fund benefits from a fee-sharing mechanism that allows an annual donation up to €500K to our Group Foundation.
How do you protect investments against the kind of market volatility we’ve seen this year?
First of all, we are convinced that investing in the best ESG and impact companies with solid financial profiles enables us to be more resilient in times of volatility.
Furthermore, we think that two aspects of our portfolio construction protect us from volatility: 1/ inverse -variance weighting of each stock 2/ the fund can have up to 10% of cash to limit its market exposure. We took full advantage of this possibility during the crisis!
What are the key differences in impact investing in listed equities compared to private equity space?
Impact investing was born in the private equity sector and recently gained importance on the listed equity side but with some adaptations.
We usually identify three pillars that differentiate impact investing from traditional investing:
- Intentionality. At LFDE, we only invest in companies that derives a large portion of their sales from products and services that contribute positively to the SDGs.
- Measurability. At LFDE, we publish a report every year that details with the highest level of transparency the concrete impact of our investments such as the amount of CO2 avoided, or the number of patients treated. All of this is verified by an external expert.
- Additionality. At LFDE we prefer to talk about “contribution” through many tools (engagement with companies, being invested in the long term and contributing to the responsible investing ecosystem...).
**The fund is invested mainly in equities, and carries the risk of capital loss.
