The Global Equity (SRI) strategy is a high-conviction global equity portfolio managed by a stable team of experienced industry specialists with a tried and tested investment philosophy. The strategy is differentiated by its investment process, which focuses on taking an ownership mind-set to drive environmental, social and governance (ESG) integration and active engagement, as well as its dedicated risk aware portfolio construction process. The team’s approach leads to performance that’s driven by stock-specific risk, a source of return that has no persistent correlation to other active return.
This approach is paired with socially responsible investment (SRI) screening criteria, which exclude businesses involved in the areas of alcohol, gaming, weapons, adult entertainment, cannabis, and tobacco.
- Long-term ownership mind-set with integrated ESG
- Focus on companies with sustainable Competitive Dynamics
- Negative screening of certain industry sectors
- Efficient usage of risk
The RBC Global Equity team has been managing client money the same way since our foundation in 2006. The investment team enjoys a very strong, collaborative culture based upon teamwork, transparency, alignment and continuous improvement.
The Team believes culture is critical in turning a collection of skilled individuals into a strong team that is committed to making a positive difference for our clients, for investee companies, and for the communities in which we operate.
We believe that over the long-term, investing in great companies at attractive valuations generates value for shareholders that significantly exceeds the return on the average company or the market.
Great businesses create contingent assets based on extra-financial forms of capital. These are often subtle, qualitative characteristics that can take time to be reflected in company financials - characteristics such as sustainable business practices, engaged employees as well as great relationships with suppliers, customers, and the community. Because these do not immediately accrue to the bottom line and are not reflected in typical financial reporting, the market often underappreciates their impact. However, healthy extra-financial capital mitigates risk and creates long-term economic value. We believe that by evaluating the health of extra-financial factors, including environmental, social and governance (ESG), we are not only able to reduce risk and uncover alternative sources of alpha, but also achieve a responsible allocation of capital.
Our Competitive Dynamics framework
We use industry analysis to identify great businesses within their competitive set before assessing them using our Competitive Dynamics framework. We will not invest unless all four criteria are satisfied.
Winning business model
Each business in the portfolio has a unique, hard-to-replicate element that gives it a sustainable edge over its competitors. That element varies from industry to industry, which is why we are structured as a team of industry experts.
Market share opportunity
We pay close attention to the industry structure and nature of competition and expect a company with a true edge over competitors to expand or at least maintain its market share.
We believe that a company with a winning business model able to take market share will amplify the amount of value creation if it is exposed to growing end markets.
Management and ESG practices
We believe investing is not simply renting a share for a period, but taking an ownership stake in a business and accepting the responsibility that ownership entails. We want to partner with responsible management teams who can both operate the business effectively on a day-to-day basis and position it strategically over the long term.
In constructing the portfolio, we use our proprietary risk application in order to analyze the portfolio's risk exposures, enabling us to build-in sufficient diversification for us to capture the stock-specific intended risk sources whilst maintaining a focused portfolio of best ideas. By ensuring the individuality of those best ideas, we maximize diversification of unintended risk exposures and avoid bias-creating concentrations. The result is a portfolio where excess returns are dominated by the investment philosophy and stock-specific risk.