abrdnI-Global Sustainable Eqty A Acc USD |
by Ronald van Genderen
Management of this strategy was handed over to a new team in March 2023, which leaves it with a lot to prove and keeps the People Pillar rating at Below Average. The approach was repurposed into a sustainable mandate in 2021, and the new management retains many hallmarks of a well-defined sustainable strategy, but it remains unproven. Therefore, it retains an Average rating on the Process Pillar. This strategy is managed by a four-member team that was appointed as of the end of March 2023. The previous management trio was taken off the strategy following a wider restructuring of Abrdn's investment teams. It marks another change and confirms the view that the management of this strategy has been on unstable footing in recent years. Dominic Byrne, Chris Haimendorf, Joanna McIntyre, and Jamie Mills O'Brien are well-experienced on average, but Byrne is the only member with previous experience in managing global equity portfolios. However, the backgrounds of the other three members seem complementary as they bring European, international, and U.S. equity expertise. This will only bear fruit when they form a cohesive team, which will take time as they haven’t worked together before. Also, their previous track records are unimpressive, and additional concerns are raised by their workload. They manage the firm's global and U.S. sustainable strategies, but each team member also has additional responsibilities. This strategy's approach transformed into a full-fledged sustainable mandate in 2021. This resulted in a thorough integration of environmental, social, and governance criteria throughout its process. The bottom-up-driven and valuation-aware philosophy is still on display here. The comanagers apply a stock-picking approach focusing on quality and aim for exposure to the highest-conviction ideas within the firm's regional equity teams. These should flow to them through an 11-member global sector research and sustainability team that was installed in March 2023. The 110 portfolio managers and analysts embedded in these teams use one single research framework, which should warrant consistency. However, we note that this wider team has been plagued by high turnover, although it remains a sizable resource. The team invests in three types of companies, including operational leaders, ESG solutions providers, and ESG improvers. The first two buckets likely contain growthier stocks and alongside the quality focus of the approach, this will drive the 30-60 stock portfolio into the core-growth column of the Morningstar Style Box. The valuation awareness and ability to invest in ESG improvers gives the team the tools to balance the portfolio's style, which will generally be less growth-oriented versus the global large-cap growth equity Morningstar Category and Morningstar Global Growth Target Market Exposure category benchmark. The approach is described as patient, but both under the previous and current team, the portfolio has shown a higher trading activity than expected. Many of the new positions that the new team initiated were U.S.-based companies and this largely closed the significant underweighting in the United States held by the previous team. Meanwhile, sector allocations didn't change much, and the team generally avoids investments in the communication-services, energy, and real estate sectors for quality and sustainability reasons. At the same time, the portfolio exhibits a large underweighting in the technology sector, while it is considerably overweight in the financial-services sector. |
Morningstar Pillars | |
People | Below Average |
Parent | Average |
Process | Average |
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