Case study of Bell Global Sustainable Fund

By Penny Pryor

Bell Asset Management has recently launched the Bell Global Sustainable Fund. The Fund is a concentrated actively-managed, ESG focused global equities portfolio investing in 30 to 50 global stocks, benchmarked against the MSCI World ex Australia Index (currency hedged and unhedged). Chief investment officer, Ned Bell, explained why it was important to launch this strategy to retail investors.

Why have you decided to launch a sustainable product, was it in response to client feedback/demand?

With the rise of responsible investing in Australia, we're finding that wholesale and retail investors are increasingly seeking investments that reflect their values and goals to address a variety of pressing environment and social issues, including climate change, labour issues and governance.

Since the establishment of Bell Asset Management in 2003, we have had a strong commitment to the integration of ESG across all our strategies and funds. The launch of the Global Sustainable Fund is a natural progression for us as it is strongly supported by our investment style. We found a noticeable rise in investors committed to social and environmental causes in their portfolio choices, and identified that the Fund may be suited to socially aware investors who believe that active shareholder pressure may bring about change faster.

What goes into launching a new product?

The Fund is an enhanced ESG focused strategy that we have been managing since March 2016 and represents our best 30-50 ideas. As an existing strategy (previously only accessible by institutional investors) it has achieved a strong track record, and being our third retail offering - the establishment of the Fund was relatively streamlined.

For us, ESG investing is not only about excluding certain types of investments, but rather a tool that we actively employ within all stages of the investment process to construct a portfolio that aims to generate materially better returns and manage risks. Clients are able to gain a diversified exposure to high quality global businesses through a portfolio that avoids certain sectors such as Adult Entertainment, Armaments, Coal, Gaming, Human Rights Abuses, Nuclear, Tobacco, Unconventional Oil and Gas Extraction, and Uranium.

What is unique about your offering?

We have a long history of responsible investing and have been incorporating these themes into our portfolios for over ten years. The innovation in our ESG approach has enabled our portfolio's carbon footprint to reach a notable level of 74.7% lower than the benchmark MSCI World Index. Relative to the benchmark, we aim to build a portfolio with a stronger aggregated MSCI ESG score and 25% lower carbon intensity. We believe there will be a lot more innovation going forward and hence further opportunities for our investors.

Can you explain how you expect the fee structure to work?

Unhedged - management fee of 0.80 per cent per annum plus 0.10 per cent per annum expenses (total management fees and costs 0.90 per cent per annum)

Hedged - management fee is 0.80 per cent per annum plus 0.15 per cent per annum expenses (total management fee and costs 0.95 per cent per annum)