I. LFIS Vision UCITS – Quant Global Allocation ("The Sub-Fund")
Summary :
- No sustainable investment objective
This financial product promotes environmental or social characteristics, but does not have a sustainable investment objective.
- Environmental or social characteristics of the financial product
The Sub-Fund promotes certain environmental and social characteristics through its sub-strategies involving the use of ESG filters for its implemented exposures to equity markets on the one hand, with the objective of covering at least 25% of the Sub-Fund's total equity exposure, and for its investments implemented for liquidity management purposes on the other hand, with the objective of covering at least 25% of these investments.
Sustainability indicators:
The Sub-Fund promotes certain environmental and social characteristics through its sub-strategies risk-on strategies and diversifying investment strategies which implementation involve the use of ESG filters. The Sub-Fund seeks to incorporate environmental, social and governance (“ESG”) considerations:
- to its exposures implemented in respect of the equity markets, with a target of covering at least 25% of the total Sub-Fund equity exposures
- through the application of a proprietary ESG methodology (as further described below), in respect of exposures to single and/or baskets of equity stocks;
- and/or through the use of market indices implementing ESG considerations.
- to its investments implemented for liquidity management purposes, with a target of covering at least 25% of those investments
- through the application of a proprietary ESG methodology (as further described below), in respect of investments in money market and/or debts instruments issued by private issuers;
- and/or through the use of social and/or green bonds which comply with the principles set forth by the International Capital Market Association (available here: https://www.icmagroup.org/sustainable-finance/), e.g. based on ESG data provided by external data providers.
Sustainability Objectives:
The Sub-Fund does not commit to make sustainable investments in line with the EU Taxonomy Regulation criteria for environmentally sustainable economic activities. However, it cannot be excluded that some underlying investments are unintentionally aligned with the EU Taxonomy Regulation criteria for environmentally sustainable economic activities.
- Investment strategy
The investment strategy consists of exposure to or investment in asset classes belonging mainly to the European equity and debt markets, taking into account environmental, social and governance ("ESG") characteristics, as described in more detail below.
- Investment proportions
The Sub-Fund is exposed to :
-1/ Investments aligned with ESG characteristics through exposures implemented on equity markets, the objective being to cover at least 25% of the Sub-Fund's total equity exposure through
- the application of proprietary ESG methodology, with regard to exposure to individual equities and/or baskets of equities; and/or the use of market indices implementing ESG considerations.
- its investments implemented for liquidity management purposes, with the aim of covering at least 25% of these investments, through the application of proprietary ESG methodology with regard to investments in money market instruments and/or debt instruments issued by private issuers; and/or through the use of social and/or green bonds compliant with the principles set out by the International Capital Markets Association.
-2/ Other includes the remaining investments of the financial product that are neither aligned with environmental or social characteristics, nor qualified as sustainable investments.
- Control of environmental or social characteristics
The environmental or social characteristics promoted by the Sub-Fund and the sustainability indicators used to measure the achievement of each of them are monitored throughout the Sub-Fund's life cycle. Before carrying out an investment or divestment operation, the fund manager analyzes its impact on the environmental and social characteristics it promotes, and ensures that its commitments will be respected.
Secondly, the internal control department carries out an independent check on compliance with all commitments applicable to the Sub-Fund, including extra-financial commitments.
- Methods applicable to environmental or social characteristics
The management company relies on existing tools for monitoring compliance with regulatory and statutory constraints to determine the extent to which the social or environmental characteristics promoted by the financial product have been achieved.
- Data sources and processing
The management company relies on data from external suppliers. In particular, the exposure of the equity portfolio to environmental and social characteristics is built up through derivatives listed on ESG indices, according to the method used by the sponsor of the selected index. The liquidity portfolio's investment in assets with environmental and social characteristics is mainly based on green bonds according to Bloomberg's extra-financial valuation method. This investment may be supplemented by subscriptions to money-market funds whose environmental and social characteristics are determined and assessed by the management company.
LFIS does not process the data used. The management company also reserves the right to use its own tools and methods to measure the social or environmental characteristics promoted by the Sub-Fund.
- Limits to methods and data
The main limitations on the methods and data used by a fund to promote environmental and social characteristics concern the quality of issuer data and the way in which these characteristics are taken into account when the fund is exposed to derivative financial instruments.
- Due diligence
The Sub-Fund's management company has extended its permanent ccontrol system to include a review of environmental and social commitments.
- Commitment policies
The commitment policy implemented by the fund management company promotes environmental and social characteristics. This policy is part of an approach that takes into account socially responsible investment criteria, as well as compliance with the European regulation on the publication of sustainability information. In addition to the commitments specific to this Sub-Fund, it includes, like all funds managed by LFIS, a policy of excluding issuers associated with the production of controversial weapons. LFIS is also able to integrate sectoral exclusion policies (tobacco, thermal coal, etc.) into some of its investment strategies.
- Designated benchmark
Given the Sub-Fund's investment strategy and its environmental and social commitments, LFIS has not designated a benchmark index.
II. Global Equity Thematic Selection ("The FCP")
Summary :
- No sustainable investment objective
This financial product promotes environmental or social characteristics, but does not have a sustainable investment objective.
- Environmental or social characteristics of the financial product
The FCP has set up a framework for taking sustainability risks into account in the selection and allocation/re-allocation of its equity funds, based on the Advisor's recommendations on the basis of sustainability factors (hereinafter referred to as "ESG factors"), including sector and normative exclusions and the Advisor's ESG rating methodology.
- Investment strategy
Equity selection, based on the Advisor's recommendations, aims to benefit from the various global megatrends while producing a positive environmental and social impact.
- Investment proportions
None
- Control of environmental or social characteristics
The environmental or social characteristics promoted by the investment fund and the sustainability indicators used to measure the achievement of each of them are monitored throughout the fund's lifecycle. Before carrying out an investment or divestment operation, the fund manager analyzes its impact on the environmental and social characteristics it promotes, and ensures that its commitments will be respected.
Secondly, internal control carries out an independent check on compliance with all commitments applicable to the fund, including extra-financial commitments.
- Methods applicable to environmental or social characteristics
The management company uses existing tools for monitoring compliance with regulatory and statutory constraints to determine the extent to which the social or environmental characteristics promoted by the financial product have been achieved.
- Data sources and processing
The selection process for the basket of equities, to which the fund is exposed, recommended by the Adviser, takes into account the assessment of the ESG profile of each issuer, based on E, S and G ratings and other research data from the Adviser's internal and external extra-financial data provider and the management company.
LFIS does not process the data used.
- Limits to methods and data
The main limits on methods and data for funds that promise environmental and social characteristics relate to the quality of issuer data and to how these characteristics are taken into account when the fund is exposed through derivative financial instruments.
- Due diligence
The fund's management company has extended its permanent control system to include a review of environmental and social commitments.
- Commitment policies
The commitment policy implemented by the fund management company promotes environmental and social characteristics. This policy is part of an approach that takes into account socially responsible investment criteria, as well as compliance with the European regulation on the publication of sustainability information. In addition to the commitments specific to this fund, it includes, like all funds managed by LFIS, a policy of excluding issuers associated with the production of controversial weapons. LFIS is also able to integrate sectoral exclusion policies (tobacco, thermal coal, etc.) into some of its investment strategies.
- Designated benchmark
Given the fund's investment strategy and environmental and social commitments, LFIS has not designated a benchmark index.
III. LFIS Vision UCITS - Diversified Market Neutral ("The Sub-Fund")
Summary :
- Without a sustainable investment objective
This financial product promotes environmental or social characteristics, but does not aim at sustainable investment.
- Environmental or social characteristics of the financial product
The Sub-Fund promotes certain environmental and social characteristics through its investment policy involving the use of an environmental, social and governance ("ESG") methodology, based on the use of filters to its equity market exposures.
The Sub-Fund promotes: - minimum environmental standards, to the exclusion of business activities deemed detrimental to the environment or society; - environmental protection, the protection and promotion of human rights, labor rights and consumer interests, the promotion of anti-corruption and tax compliance, and responsible business practices in line with the principles of the UN Global Compact and the OECD Global Compact for Business ; - assessment of the issuer's environmental characteristics, including, but not limited to, physical risks related to climate change and human capital management
Sustainability indicators used :
The Sub-Fund seeks to integrate ESG considerations into its implemented equity market exposures, through the application of a proprietary ESG methodology, with respect to exposures to single stocks and/or baskets of stocks, as described below.
The proprietary ESG methodology is designed by the manager and must follow a three-stage screening methodology, based on a set of ESG data, including scores and qualitative assessment provided by external data providers and applied to the eligible equity exposure universe:
- Business activity-based filter: resulting in the exclusion of companies due to their involvement (directly or through their shareholding) in certain industry sectors (such as tobacco, marijuana, gambling, thermal coal, tar sands, Arctic oil and gas exploration) or their non-compliance with the key negative impact indicators below;
- Controversy filter: resulting in the exclusion of (i) companies whose activities involve the manufacture, use or possession of controversial weapons (such as anti-personnel landmines, cluster munitions, depleted uranium, white phosphorus) ; (ii) companies that violate international social, labor or human rights standards and conventions, such as the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises; (iii) companies whose countries are subject to international sanctions (Office of Foreign Assets Control ("OFAC"), EU or Financial Action Task Force ("FATF")); and
- Filter based on ESG score: leading to the exclusion of companies with high carbon emissions measured by carbon intensity (Scope 1 and 2) with the aim of improving the Scope 1 and 2 emissions score by 10% relative to the investment universe.
Sustainable investment objectives:
The Sub-Fund does not undertake to make sustainable investments in accordance with the criteria of the EU Taxonomy Regulation for environmentally sustainable economic activities. However, it cannot be ruled out that some underlying investments may be unintentionally aligned with the criteria of the EU Taxonomy Regulation for environmentally sustainable economic activities.
- Investment strategy
The Sub-Fund's investment strategy is to seek stable returns with low correlation to traditional markets and a target annualized volatility of between 5% and 10%, under normal market conditions (it being understood that the annualized volatility achieved by the Sub-Fund could be higher or lower) through exposure to or investment in various asset classes, including those belonging to the equity markets, taking into account ESG characteristics.
The Sub-Fund promotes certain environmental and social characteristics through its investment policy involving the use of an ESG methodology, based on the use of filters for its equity market exposures, with the aim of covering at least 100% of these exposures. ESG filters result in the exclusion of companies due to their involvement in certain activities, or on the basis of controversial aspects, or with disqualifying scores.
- Proportion of investments
#1 Aligned with I/O characteristics includes exposures implemented in equity markets, with the objective of covering at least 100% of the Sub-Fund's total equity exposures through the application of proprietary ESG methodology, with respect to exposures to single stocks and/or baskets of stocks. Equity exposures (corrected for volatility) will represent at least 25% of the Sub-Fund's portfolio and, consequently, at least 25% of the Sub-Fund's portfolio will be #1 aligned with I/O characteristics.
Category #1 Aligned with I/O characteristics only covers subcategory #1B Other I/O characteristics, i.e. investments that are not considered sustainable investments.
- Control of environmental or social characteristics
The environmental or social characteristics promoted by the Sub-Fund and the sustainability indicators used to measure the achievement of each of them are monitored throughout the Sub-Fund's lifecycle. Before carrying out an investment/exposure operation, the portfolio manager analyzes its impact on the environmental and social characteristics it promotes, and ensures that its commitments will be respected.
Secondly, internal control carries out an independent check on compliance with all commitments applicable to the Sub-Fund, including extra-financial commitments.
- Methods applicable to environmental or social characteristics
The management company relies on existing tools for monitoring compliance with regulatory and statutory constraints to determine the extent to which the social or environmental characteristics promoted by the financial product have been achieved.
- Data sources and processing
The management company relies on data from external suppliers.
The management company also reserves the right to use its own tools and methods to measure the social or environmental characteristics promoted by the Sub-Fund.
- Limits to methods and data
The main methodological and data limitations for a Sub-Fund that promises environmental and social characteristics concern, on the one hand, the quality of data relating to issuers and, on the other hand, how these characteristics are taken into account when the Sub-Fund is exposed through financial derivatives.
- Due diligence
The fund management company has extended its permanent control system to include a review of environmental and social commitments.
- Commitment policies
The commitment policy implemented by the fund management company promotes environmental and social characteristics. This policy is part of an approach that takes into account socially responsible investment criteria, as well as compliance with the European regulation on the publication of sustainability information. In addition to the commitments specific to this Sub-Fund, like all funds managed by LFIS, it includes a policy of excluding issuers associated with the production of controversial weapons. LFIS is also able to integrate sectoral exclusion policies (tobacco, thermal coal, etc.) into some of its investment strategies.
- Designated benchmark
Given the Sub-Fund's investment strategy and environmental and social commitments, LFIS has not designated a benchmark index.