RLP Short Term Fixed Income Pn
SRI Style:
Limited Exclusions
SDR Labelling:
-
Product:
Pension
Fund Region:
UK
Fund Asset Type:
Cash (or =)
Launch Date:
25/11/2011
Last Amended:
Aug 2024
Dialshifter (
):
Fund Size:
£1305.81m
(as at: 31/12/2022)
ISIN:
GB00B796FP77
Contact Us:
Sustainable, Responsible
&/or ESG Overview:
This Pension product is linked to the "Royal London Short Term Fixed Income" fund. The following information refers to the primary (OIEC) fund.
ESG integration into cash and short-term fixed income portfolios is still not widely understood. We do this through a four-pillar approach that combines relatively simple actions with more complex, bespoke analysis as we look to maximise our ability to understand and mitigate ESG risks in the portfolios. The first step is an exclusion policy which screens out companies that generate over 10% of revenues from tobacco, armaments, and fossil fuel extractors. An ESG risk assessment is conducted for each security, considering ESG score based on MSCI data, and tenor of exposure. MSCI data is enhanced through an internal framework to derive individual ESG security risk, which can then be aggregated to arrive at a portfolio-wide score. The third stage involves a qualitative assessment which adds an important overlay to a purely quantitative framework. The final stage is ongoing engagement.
Primary fund last amended:
Aug 2024
Information directly from fund manager.
Fund Filters
Climate Change & Energy
Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.
Ethical Values Led Exclusions
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.
Gilts & Sovereigns
Find funds that invest in loans issued the government, commonly known as gilts or government bonds. These may or may not be ringfenced for specific projects (see additional options). See fund literature for any selection criteria.
Find funds that invest in financial instruments issued by governments, typically for risk reasons, but do not screen them for environmental and social characteristics. See fund literature for more information.
Banking & Financials
Find funds that include banks as part of their holdings / portfolio.
Finds funds that include financial instruments (cash, derivatives and / or foreign exchange) issued by banks. See fund literature for further information as strategies vary.
Fund Governance
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature.
How The Fund Works
Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
This fund uses, or can use, specialist strategies to aid performance which involve ‘lending’ fund assets to others at specific points in time.
Intended Clients & Product Options
Find funds that are available via a tax efficient ISA product wrapper.
Fund Management Company Information
About The Business
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Find fund managers that consider responsible ownership and ESG to be a key differentiator for their business.
Find fund management companies that take sustainability criteria into account when selecting and/or managing all of their property / real estate investments.
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex.
This asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses).
Asset management company has investments in bonds designed to meet sustainability requirements - however these assets may not be 'ringfenced' for this purpose. See fund manager website for details.
Collaborations & Affiliations
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association
Find fund management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
Fund management entity is a member of the Investment Association https://www.theia.org/
Resources
Find fund management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
Find a fund management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.
Find fund management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors.
Accreditations
Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave like responsible, typically longer term 'company owners'.
Engagement Approach
Find fund management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
The asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Fund managers have stewardship strategies in place that focus on improving governance standards across investee assets
Asset manager has stewardship strategy in place which involves discussing mental health issues with investee companies - with the aim of raising standards
Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards
Working to address sustainability, ESG and related concerns around artificial intelligence.
Company Wide Exclusions
Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.
Climate & Net Zero Transition
Fund management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Fund manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
Find fund management companies that have published a Climate Risk policy or statement that is signed / owned by their Chief Executive.
This asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.
Find fund management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.
Finds organisations / fund managers that have published ‘forward looking climate metrics’ e.g. 'implied temperature rise' data that are a total of the asset management company's share (% owned) of all the investee company emissions of the assets they manage, as well as their own direct and other indirect emissions.
This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions by reducing their emissions. Calculations and scope vary.
Finds organisations / fund management companies that are in the process of working out how to make a ‘net zero commitment’ - meaning that when that is finalised they will have started the process of reducing their total greenhouse gas emissions to'zero'.
Transparency
Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Find companies that publish information about their sustainable and responsible investment strategies on their company website.
Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.
Find fund management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information.
Sustainable, Responsible &/or ESG Policy:
RLAM’s ethical framework combines the avoidance of companies involved in excluded activities with the identification of best of breed companies in permitted sectors. Companies that generate over 10% of their turnover from either one or a combination of the following categories are excluded:
- Armaments manufacturing armaments or nuclear weapons, or associated strategic products.
- Tobacco growing, processing or selling tobacco products.
If a company breaches this threshold, then it is likely that that company’s involvement in that excluded sector is a noteworthy part of their business and strategy.
Also, this threshold is deemed to be realistic and appropriate in terms of assessing a company, given that it may not be possible to always pinpoint the exact turnover derived from an excluded activity. This threshold ensures that a minimum of 90% of each holding meets the ethical criteria.
Process:
Investment team
RLAM’s investment team of fund managers and analysts work in a close and highly collegiate environment designed to encourage the free flow of thoughts and ideas across the team. The nature and size of the team enables new ideas and opportunities to be discussed freely. The close proximity of all members of the team allows agreed decisions to be implemented quickly, ensuring that all portfolios benefit from relevant new ideas with minimal delay. The individual fund managers consult with other team members and credit analysts in on-desk discussions. The Cash and Rates team and the rest of the Fixed Income team are central to the research process.
The decisions to trade individual securities are made by the lead fund managers. This process ensures quick implementation of all buy/sell decisions. In addition, individual stocks are reviewed during the weekly off-desk team meeting. All investment decisions must fit within the team’s overall views.
Portfolio construction
Cash
The portfolios only invest in straightforward, highly liquid instruments issued by a wide range of highly rated banks. This diversification spreads the credit risk and provides greater security for investors in the funds. All banks have the minimum of an A1, P1 or F1 rating from the major ratings agencies. We monitor the ratings of all of the institutions we lend to on a real-time basis by subscribing to Standard & Poor’s, Moody’s and Fitch’s online ratings services. Any credit changes are notified to us immediately, ensuring the funds maintain the highest credit quality.
Government Bonds
The portfolios may invest in UK government bonds (gilts and index linked gilts). Investment in short and medium-dated government bonds allows the managers to take advantage of opportunities to capture short-term movements in the government bond yield curve and bond prices, in order to achieve higher overall returns.
Management of gilts follows a top-down process, but we believe significant value can be added through stock selection. Our investment approach for UK government bonds encompasses two elements:
- An assessment of the market drivers and their behaviour in a way that allows us to define the sources of incremental return; and
- Ensuring that portfolio construction and risk allocation remain consistent with the portfolio objectives.
Covered Bonds
The funds may invest in covered bonds when thought appropriate by the managers. Issued by financial institutions, these bonds are asset backed, most often by a pool of mortgages. These highly liquid securities are regulated in the UK by the FCA and are exempt from being bailed-in.
Corporate Bonds, Sovereigns and Supranationals
The funds may also invest in Floating Rate Notes (FRNs) and short-dated bonds issued by banks and building societies with a minimum credit rating of AA- for the Cash Plus Fund and investment grade for Enhance Cash Plus. Sovereign and supranational bonds may be held and would be rated AA or above for the Cash Plus Fund.
Our credit analysis process is characterised by a focused team of experienced investors working together by utilising an efficient and disciplined approach to analysing the investment universe. We separate portfolios into four issuer categories, each requiring a different analytical approach depending on the degree of operational and financial volatility the issuer exhibits, and the extensiveness of external research coverage the issue receives. Our philosophy leads us to place a higher degree of emphasis (relative to our peers) on analysing the covenants and security that protect our investors in a default scenario. Only then can we be fully confident that we are being well compensated for taking credit risk. There is high degree of interaction and cohesiveness within the Credit team in analysing credit bonds. Our size allows decision making to be efficient, informal, and dynamic.
Asset allocation
Allocation across the permitted asset classes is largely driven by the risk/return profile of the funds in relation to their Fitch Rating. This rating reflects high quality debt in the underlying holdings, and a low volatility to market risk.
Recent process changes
Our overall investment process and philosophy has remained unchanged over time, and continues to deliver strong returns for our clients. We believe that volatility in government bond markets is likely to persist and that, as an active manager, RLAM can take advantage of pricing anomalies.
ESG Integration
Our team’s approach to ESG integration is a 4-step process which comprises ethical exclusion criteria, quantitative and qualitative analysis, and engagement.
- Ethical Exclusion: in addition to our RLAM firm-wide exclusion policy on controversial weapons, the Cash funds’ ethical policy excludes issuers that generate over 10% of their revenue from armaments, tobacco and fossil fuel extraction, or a combination of the three. A breach of the threshold would indicate that an issuer’s involvement in the excluded sector is a noteworthy part of their business and strategy.
- Armaments – manufacturing armaments or nuclear weapons or associated strategic products.
- Tobacco – growing, processing, or selling tobacco products.
- Fossil fuel – exploration, extraction and refining of oil, gas or coal
- Quantitative Analysis: the quantitative framework uses ESG risk scores as an input, through which scores assigned to issuers in our Cash range are adjusted with a specific instrument’s duration, under the premise that instruments with a shorter duration are less exposed to ESG risk. ESG scores are considered alongside credit ratings and the team model the impact of each proposed trade on the overall fund ESG risk score. Overall, this approach allows them to actively and dynamically monitor the fund’s exposure to ESG risk monitoring pre- and post- trading decisions. Individual ESG security risks are aggregated to allow managers to arrive at a portfolio-level score. The managers also carry out regular stress testing to evaluate an ESG rating downgrade effect of the top 3, top 5 and all rated positions within the fund, on the ESG risk profile of the fund as a whole.
- Qualitative Analysis: is based on research and insights produced by our team of RI specialists. To ensure key ESG themes impacting sectors or issuers within the fund are routinely assessed, the RI team conduct quarterly reviews with the Cash management team. These reviews adopt a more formal approach and supplement the regular/ad-hoc interaction between the teams and provide an opportunity to overlay bespoke insights into the strategy. Ongoing monitoring of ESG issues is aided by an AI-based tool that alerts RI analysts and cash specialists of ESG controversies as they arise.
- Engagement: RLAM’s robust engagement programme covers all the asset classes we manage. Ultimately, we use engagement as a tool to aid selection and monitoring of companies/issuers in our funds, and to improve their corporate behaviour and performance over time. Engagement in this case adopts two non-mutually exclusive forms: for information, where we seek to uncover additional evidence to supplement existing research or findings that feed into the investment process; or for change and influence, that seeks changed behaviour as a direct outcome of the engagement. Both forms are crucial to being a good steward of our clients’ assets.
Resources, Affiliations & Corporate Strategies:
Please note, the following is for informational purposes only and does not necessarily reflect our response to SDR reporting.
Royal London Asset Management’s in-house Responsible Investment (RI) team of 17 professionals is led by Head of Responsible Investment, Ashley Hamilton-Claxton. The RI team works with the investment teams to monitor, assess and analyse ESG factors, vote our shares and engage with companies to encourage better social and environmental outcomes, or better risk management. This team is also responsible for helping to set out our approach and policies around systemic issues such as climate change, providing guidance, feedback and coaching to fund managers and analysts on the latest data, research, policy and industry practices.
Governance of Responsible Investment at Royal London Asset Management is integrated at varying levels of the organisation however is led by senior leadership. The Board has ultimate responsibility for setting Royal London Asset Management’s risk appetite and reviewing our strategic risks. Our Chief Investment Officer (CIO) is a regulated Senior Management Function (SMF) and is the Executive team member that is accountable for setting the investment strategy, and overseeing our Responsible Investment function, including our approach to stewardship and climate investment risk. The CIO, with support from the investment teams, updates the Board and monitors responsible investment in line with Royal London Asset Management’s risk tolerance threshold. The CIO is also responsible for ensuring responsible investment, stewardship and climate change risk management is embedded across Royal London Asset Management’s investment strategies. The CIO is a member of Royal London Asset Management’s Executive Committee and also chairs the Investment Committee.
Royal London Asset Management is a member of the following initiatives:
- United Nations Principles For Responsible Investment (UNPRI) (2008)
- Global Real Estate Sustainability Benchmark (GRESB) (2013)
- 30% Club Investor Group 2016 UK Stewardship Code (2016)
- UK Sustainable Investment and Finance Association (UKSIF) (2016)
- Carbon Disclosure Project (CDP) (2018)
- Interfaith Center on Corporate Responsibility (ICCR) (2018)
- Climate Action 100+ (2019)
- Institutional Investor Group on Climate Change (IIGCC) (2019)
- Investment Association (IA) (2019)
- Sustainability Accounting Standards Board (SASB) (2019)
- Task Force on Climate-related Financial Disclosures (TCFD) (2020)
- Climate Financial Risk Forum - FCA and PRA (CFRF) (2020)
- Financing the Just Transition Alliance (FJTA) (2020)
- Ceres (2020)
- Investor Alliance for Human Rights (2020)
- Better Buildings Partnership (2020)
- UK Green Building Council 2020 Better Buildings Partnership Climate Commitment (2021)
- Net Zero Asset Manager initiative (NZAM) (2022)
- FAIRR Initiative (2022)
- Workplace Mental Health Benchmark (CCLA) (2022)
- FCA Vote Disclosure Forum (2022)
- FCA Disclosures & Labelling Advisory Committee (2022)
- Church of England Pensions Board - Executive Pay (2022)
- International Labour Organisation (ILO) (2022)
- International Labour Organisation (ILO) - United Nations Environment Programme - Finance (UNEP-Fi) (2022)
- The Investor Agenda (2022)
- International Sustainability Standard Board (ISSB)(2022)
- Transition Plan Taskforce (TPT) (2022)
- World Benchmarking Alliance (WBA) (2022)
- Access to Medicine Foundation (2023)
- Net Zero Engagement Initiative (NZEI) organised by Institutional Investment Group on Climate Change (IIGCC) (2023)
- Swedish Council of Ethics - Human Rights in Technology (2023)
- Nature Action 100 (NA100) (2023)
Source: Royal London Asset Management, correct as of 31 March 2024, Year in brackets indicates date joined.
Literature
Fund Holdings
Voting Record
Disclaimer
Important Information
For further information, please contact:
Royal London Asset Management Limited
80 Fenchurch Street
London, EC3M 4BY
Telephone: 020 3272 5594
E-mail: alice.bennett@rlam.co.uk
Telephone Calls may be recorded
For professional clients only. This document may not be distributed to any unauthorised persons and is not suitable for retail clients.
This document is for information purposes only and it is not intended as promotional material in any respect. The views expressed are the author’s own and do not constitute investment advice. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It does not provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations.
Past performance is not a reliable indicator of future results. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. Portfolio characteristics and holdings are subject to change without notice. For more information concerning the risks of investing, please refer to the Prospectus or Key Investor Information Document (KIID), available via the relevant Fund Price page on www.rlam.co.uk
All confidential information relating to any Royal London Group company must be treated by you in the strictest confidence. It may only be used for the purposes of assessing the proposal to engage Royal London Asset Management Limited (RLAM). Confidential information should not be disclosed to any third party and should only be disclosed to those of your employees and professional advisers who are required to see such information for the purpose set out above. You should ensure that these persons are made aware of the confidential nature of such information and treat it accordingly. You agree to return and/ or destroy all confidential information on receipt of our written request to do so.
Issued in June 2024 by Royal London Asset Management Limited, 80 Fenchurch Street, London EC3M 4BY. Authorised and regulated by the Financial Conduct Authority, firm reference number 141665. A subsidiary of The Royal London Mutual Insurance Society Limited.
The Royal London Mutual Insurance Society Limited is registered in England and Wales number 99064. Registered Office: 80 Fenchurch Street, London EC3M 4BY. The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Royal London Mutual Insurance Society Limited is on the Financial Services Register, registration number 117672. Registered in England and Wales number 99064. Our ref: Q RLAM EM 2051.
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
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|---|---|---|---|---|---|---|---|---|
RLP Short Term Fixed Income Pn |
Limited Exclusions | - | Pension | UK | Cash (or =) | 25/11/2011 | Aug 2024 | |
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Fund Size: £1305.81m (as at: 31/12/2022) ISIN: GB00B796FP77 Contact Us: bdsupport@RLAM.co.uk |
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Sustainable, Responsible &/or ESG OverviewThis Pension product is linked to the "Royal London Short Term Fixed Income" fund. The following information refers to the primary (OIEC) fund.
ESG integration into cash and short-term fixed income portfolios is still not widely understood. We do this through a four-pillar approach that combines relatively simple actions with more complex, bespoke analysis as we look to maximise our ability to understand and mitigate ESG risks in the portfolios. The first step is an exclusion policy which screens out companies that generate over 10% of revenues from tobacco, armaments, and fossil fuel extractors. An ESG risk assessment is conducted for each security, considering ESG score based on MSCI data, and tenor of exposure. MSCI data is enhanced through an internal framework to derive individual ESG security risk, which can then be aggregated to arrive at a portfolio-wide score. The third stage involves a qualitative assessment which adds an important overlay to a purely quantitative framework. The final stage is ongoing engagement. |
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Primary fund last amended: Aug 2024 |
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Information received directly from Fund Manager |
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Fund FiltersClimate Change & Energy
Fossil fuel reserves exclusion
Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details. Ethical Values Led Exclusions
Tobacco and related product manufacturers excluded
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Armaments manufacturers avoided
Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details. Gilts & Sovereigns
Invests in gilts / government bonds
Find funds that invest in loans issued the government, commonly known as gilts or government bonds. These may or may not be ringfenced for specific projects (see additional options). See fund literature for any selection criteria.
Invests in sovereigns as an unscreened asset class
Find funds that invest in financial instruments issued by governments, typically for risk reasons, but do not screen them for environmental and social characteristics. See fund literature for more information. Banking & Financials
Invests in banks
Find funds that include banks as part of their holdings / portfolio.
Invests in financial instruments issued by banks
Finds funds that include financial instruments (cash, derivatives and / or foreign exchange) issued by banks. See fund literature for further information as strategies vary. Fund Governance
ESG integration strategy
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature. How The Fund Works
Negative selection bias
Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
Use stock / securities lending
This fund uses, or can use, specialist strategies to aid performance which involve ‘lending’ fund assets to others at specific points in time. Intended Clients & Product Options
Available via an ISA (OEIC only)
Find funds that are available via a tax efficient ISA product wrapper. Fund Management Company InformationAbout The Business
Responsible ownership / stewardship policy or strategy (AFM company wide)
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
ESG / SRI engagement (AFM company wide)
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Vote all* shares at AGMs / EGMs (AFM company wide)
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Responsible ownership / ESG a key differentiator (AFM company wide)
Find fund managers that consider responsible ownership and ESG to be a key differentiator for their business.
Sustainable property strategy (AFM company wide)
Find fund management companies that take sustainability criteria into account when selecting and/or managing all of their property / real estate investments.
Integrates ESG factors into all / most (AFM) fund research
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
In-house diversity improvement programme (AFM company wide)
Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex.
Invests in newly listed companies (AFM company wide)
This asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses).
Invests in new sustainability linked bond issuances (AFM company wide)
Asset management company has investments in bonds designed to meet sustainability requirements - however these assets may not be 'ringfenced' for this purpose. See fund manager website for details. Collaborations & Affiliations
PRI signatory
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
UKSIF member
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association
Fund EcoMarket partner
Find fund management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
Investment Association (IA) member
Fund management entity is a member of the Investment Association https://www.theia.org/ Resources
In-house responsible ownership / voting expertise
Find fund management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
Employ specialist ESG / SRI / sustainability researchers
Find a fund management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.
Use specialist ESG / SRI / sustainability research companies
Find fund management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors. Accreditations
UK Stewardship Code signatory (AFM company wide)
Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave like responsible, typically longer term 'company owners'. Engagement Approach
Regularly lead collaborative ESG initiatives (AFM company wide)
Find fund management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
Engaging on climate change issues
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Engaging with fossil fuel companies on climate change
Asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Engaging to encourage responsible mining practices
Asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
Engaging on biodiversity / nature issues
The asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Engaging to encourage a Just Transition
Asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Engaging on human rights issues
Asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Engaging on labour / employment issues
Asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Engaging on diversity, equality and / or inclusion issues
Asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Engaging to stop modern slavery
working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Engaging on governance issues
Fund managers have stewardship strategies in place that focus on improving governance standards across investee assets
Engaging on mental health issues
Asset manager has stewardship strategy in place which involves discussing mental health issues with investee companies - with the aim of raising standards
Engaging on responsible supply chain issues
Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards
Engaging on the responsible use of AI
Working to address sustainability, ESG and related concerns around artificial intelligence. Company Wide Exclusions
Controversial weapons avoidance policy (AFM company wide)
Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles. Climate & Net Zero Transition
Net Zero commitment (AFM company wide)
Fund management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Voting policy includes net zero targets (AFM company wide)
Fund manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
Publish 'CEO owned' Climate Risk policy (AFM company wide)
Find fund management companies that have published a Climate Risk policy or statement that is signed / owned by their Chief Executive.
Net Zero - have set a Net Zero target date (AFM company wide)
This asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.
Encourage carbon / greenhouse gas reduction (AFM company wide)
Find fund management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.
‘Forward Looking Climate Metrics’ published / ITR (AFM company wide)
Finds organisations / fund managers that have published ‘forward looking climate metrics’ e.g. 'implied temperature rise' data that are a total of the asset management company's share (% owned) of all the investee company emissions of the assets they manage, as well as their own direct and other indirect emissions.
Carbon offsetting – do NOT offset carbon as part of net zero plan (AFM company wide)
This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions by reducing their emissions. Calculations and scope vary.
Working towards a ‘Net Zero’ commitment (AFM company wide)
Finds organisations / fund management companies that are in the process of working out how to make a ‘net zero commitment’ - meaning that when that is finalised they will have started the process of reducing their total greenhouse gas emissions to'zero'. Transparency
Publish responsible ownership / stewardship report (AFM company wide)
Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Full SRI / responsible ownership policy information on company website
Find companies that publish information about their sustainable and responsible investment strategies on their company website.
Publish full voting record (AFM company wide)
Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.
Dialshifter statement
Find fund management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information. Sustainable, Responsible &/or ESG Policy:RLAM’s ethical framework combines the avoidance of companies involved in excluded activities with the identification of best of breed companies in permitted sectors. Companies that generate over 10% of their turnover from either one or a combination of the following categories are excluded:
Also, this threshold is deemed to be realistic and appropriate in terms of assessing a company, given that it may not be possible to always pinpoint the exact turnover derived from an excluded activity. This threshold ensures that a minimum of 90% of each holding meets the ethical criteria. Process:Investment team RLAM’s investment team of fund managers and analysts work in a close and highly collegiate environment designed to encourage the free flow of thoughts and ideas across the team. The nature and size of the team enables new ideas and opportunities to be discussed freely. The close proximity of all members of the team allows agreed decisions to be implemented quickly, ensuring that all portfolios benefit from relevant new ideas with minimal delay. The individual fund managers consult with other team members and credit analysts in on-desk discussions. The Cash and Rates team and the rest of the Fixed Income team are central to the research process. The decisions to trade individual securities are made by the lead fund managers. This process ensures quick implementation of all buy/sell decisions. In addition, individual stocks are reviewed during the weekly off-desk team meeting. All investment decisions must fit within the team’s overall views.
Portfolio construction Cash The portfolios only invest in straightforward, highly liquid instruments issued by a wide range of highly rated banks. This diversification spreads the credit risk and provides greater security for investors in the funds. All banks have the minimum of an A1, P1 or F1 rating from the major ratings agencies. We monitor the ratings of all of the institutions we lend to on a real-time basis by subscribing to Standard & Poor’s, Moody’s and Fitch’s online ratings services. Any credit changes are notified to us immediately, ensuring the funds maintain the highest credit quality.
Government Bonds The portfolios may invest in UK government bonds (gilts and index linked gilts). Investment in short and medium-dated government bonds allows the managers to take advantage of opportunities to capture short-term movements in the government bond yield curve and bond prices, in order to achieve higher overall returns. Management of gilts follows a top-down process, but we believe significant value can be added through stock selection. Our investment approach for UK government bonds encompasses two elements:
Covered Bonds The funds may invest in covered bonds when thought appropriate by the managers. Issued by financial institutions, these bonds are asset backed, most often by a pool of mortgages. These highly liquid securities are regulated in the UK by the FCA and are exempt from being bailed-in.
Corporate Bonds, Sovereigns and Supranationals The funds may also invest in Floating Rate Notes (FRNs) and short-dated bonds issued by banks and building societies with a minimum credit rating of AA- for the Cash Plus Fund and investment grade for Enhance Cash Plus. Sovereign and supranational bonds may be held and would be rated AA or above for the Cash Plus Fund. Our credit analysis process is characterised by a focused team of experienced investors working together by utilising an efficient and disciplined approach to analysing the investment universe. We separate portfolios into four issuer categories, each requiring a different analytical approach depending on the degree of operational and financial volatility the issuer exhibits, and the extensiveness of external research coverage the issue receives. Our philosophy leads us to place a higher degree of emphasis (relative to our peers) on analysing the covenants and security that protect our investors in a default scenario. Only then can we be fully confident that we are being well compensated for taking credit risk. There is high degree of interaction and cohesiveness within the Credit team in analysing credit bonds. Our size allows decision making to be efficient, informal, and dynamic.
Asset allocation Allocation across the permitted asset classes is largely driven by the risk/return profile of the funds in relation to their Fitch Rating. This rating reflects high quality debt in the underlying holdings, and a low volatility to market risk.
Recent process changes Our overall investment process and philosophy has remained unchanged over time, and continues to deliver strong returns for our clients. We believe that volatility in government bond markets is likely to persist and that, as an active manager, RLAM can take advantage of pricing anomalies.
ESG Integration Our team’s approach to ESG integration is a 4-step process which comprises ethical exclusion criteria, quantitative and qualitative analysis, and engagement.
Resources, Affiliations & Corporate Strategies:Please note, the following is for informational purposes only and does not necessarily reflect our response to SDR reporting. Royal London Asset Management’s in-house Responsible Investment (RI) team of 17 professionals is led by Head of Responsible Investment, Ashley Hamilton-Claxton. The RI team works with the investment teams to monitor, assess and analyse ESG factors, vote our shares and engage with companies to encourage better social and environmental outcomes, or better risk management. This team is also responsible for helping to set out our approach and policies around systemic issues such as climate change, providing guidance, feedback and coaching to fund managers and analysts on the latest data, research, policy and industry practices. Governance of Responsible Investment at Royal London Asset Management is integrated at varying levels of the organisation however is led by senior leadership. The Board has ultimate responsibility for setting Royal London Asset Management’s risk appetite and reviewing our strategic risks. Our Chief Investment Officer (CIO) is a regulated Senior Management Function (SMF) and is the Executive team member that is accountable for setting the investment strategy, and overseeing our Responsible Investment function, including our approach to stewardship and climate investment risk. The CIO, with support from the investment teams, updates the Board and monitors responsible investment in line with Royal London Asset Management’s risk tolerance threshold. The CIO is also responsible for ensuring responsible investment, stewardship and climate change risk management is embedded across Royal London Asset Management’s investment strategies. The CIO is a member of Royal London Asset Management’s Executive Committee and also chairs the Investment Committee. Royal London Asset Management is a member of the following initiatives:
Source: Royal London Asset Management, correct as of 31 March 2024, Year in brackets indicates date joined.
LiteratureFund HoldingsVoting RecordDisclaimerImportant Information For further information, please contact: Royal London Asset Management Limited For professional clients only. This document may not be distributed to any unauthorised persons and is not suitable for retail clients. This document is for information purposes only and it is not intended as promotional material in any respect. The views expressed are the author’s own and do not constitute investment advice. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It does not provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Past performance is not a reliable indicator of future results. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. Portfolio characteristics and holdings are subject to change without notice. For more information concerning the risks of investing, please refer to the Prospectus or Key Investor Information Document (KIID), available via the relevant Fund Price page on www.rlam.co.uk All confidential information relating to any Royal London Group company must be treated by you in the strictest confidence. It may only be used for the purposes of assessing the proposal to engage Royal London Asset Management Limited (RLAM). Confidential information should not be disclosed to any third party and should only be disclosed to those of your employees and professional advisers who are required to see such information for the purpose set out above. You should ensure that these persons are made aware of the confidential nature of such information and treat it accordingly. You agree to return and/ or destroy all confidential information on receipt of our written request to do so. Issued in June 2024 by Royal London Asset Management Limited, 80 Fenchurch Street, London EC3M 4BY. Authorised and regulated by the Financial Conduct Authority, firm reference number 141665. A subsidiary of The Royal London Mutual Insurance Society Limited. The Royal London Mutual Insurance Society Limited is registered in England and Wales number 99064. Registered Office: 80 Fenchurch Street, London EC3M 4BY. The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Royal London Mutual Insurance Society Limited is on the Financial Services Register, registration number 117672. Registered in England and Wales number 99064. Our ref: Q RLAM EM 2051.
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