Global Equity ESG

Fusing fundamental analysis with systematic rigour

Reasons to invest

Strong foundation

Launched in May 2014, the Strategy builds upon the core investment process of the Global Equity Strategy, which has outperformed the global developed markets since its inception in December 2007. Past performance is not a reliable indicator of future performance.

Disciplined approach, fundamental oversight

Portfolio stocks are analysed using fundamental factors in a systematic process.

ESG can make money

Our research shows that companies that fail to adequately manage their ESG risks tend to underperform the market, demonstrating that ESG investing can do more than just make you feel good: it can make you money 1

Identifying positive change

Companies with a good or improving ESG track record are favoured. Our leading stewardship team, EOS, provides best-of-breed ESG intelligence.

Risk management

Proprietary risk management tools enable the team to monitor and neutralise macroeconomic exposures before they impact returns.

The value of investments, and income from them, may go down as well as up, and you may not get back the original amount invested.

1ESG Investing: A social uprising, by Federated Hermes, published November 2018

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Strategy overview

Geir Lode

A disciplined investment process with environmental, social and governance factors at its core does not just provide a ‘feel-good factor’: it can improve returns.

Geir Lode
- Head of Global Equities

Why Global Equity ESG?

The Strategy is designed to generate consistent excess returns and to outperform its benchmark in any market environment. Consistency is achieved by investing in a diverse range of companies with strong, long-term fundamentals and ESG characteristics. This helps defend against swings in style and means clients are not required to time their entry point to benefit from a particular style tailwind.

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The team joined Federated Hermes in 2007 with the specific aim of conducting ESG research and integration. The result of these efforts was pioneering research that linked ESG to investment performance and led to the creation of leading-edge proprietary tools, such as the QESG Score and ESG Dashboard. It also underscores our belief that companies less exposed to ESG risks will outperform over the long term, while those that are improving their ESG profile can unlock significant shareholder value. To learn more about our approach to ESG integration, click here.

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The team is also highly experienced in delivering bespoke solutions for institutional clients, such as our Low Carbon and Screened ESG strategies. These solutions incorporate sustainability, ESG and clients’ own ethical beliefs, enabling clients to achieve their investment goals without compromising their beliefs.
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How we invest

Pragmatism over perfection
Systematic analysis
Risk management

Investment philosophy

We believe companies less exposed to ESG risks will outperform over the long term and that companies improving their ESG profiles can unlock significant shareholder value.

Our investment philosophy can be encapsulated in four words: pragmatism, sustainability, responsibility and longevity.
The team takes a pragmatic view of the investment universe to identify stocks with the most attractive combinations of fundamental characteristics. We look for companies with sustainable business models and competitive advantages. In addition, it is important that companies behave responsibly, which leads us to companies that are well governed and treat their responsibilities to society and the environment seriously – such companies are more likely to avoid negative surprises. Choosing companies that demonstrate a combination of these characteristics allows the team to hold stocks over the long-term: it is only in the long term that a company can fulfil its potential.
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Gears

Investment process

We use a systematic approach, our Alpha Model, which seeks to identify companies with an attractive combination of fundamental and ESG characteristics. This is combined with a disciplined subjective analysis that interrogates the model’s efficacy and assesses the ESG characteristics of a company to identify potential weaknesses not captured by the model. The Axioma Optimiser combines stocks in an optimal portfolio to favour stock-specific risks and diversify top-down exposures.

We assess macro risks and stress-test the portfolio. We perform a subjective ‘sense check’ to validate the data, assess unquantifiable factors and interrogate ESG before constructing the final portfolio.

Team

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Geir Lode

Geir Lode

Head of Global Equities, Federated Hermes Limited

Louise Dudley

Louise Dudley, CFA

Portfolio Manager, Global Equities, Federated Hermes Limited

Lewis Grant

Lewis Grant

Senior Portfolio Manager, Global Equities, Federated Hermes Limited

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