Home' Trinidad and Tobago Guardian : January 26th 2017 Contents BG16 | MUTUAL FUND
BUSINESS GUARDIAN guardian.co.tt JANUARY 26 • 2017
A broader view of
AP Business Writer
People who favour in-
vesting in a way that
helps preserve the en-
vironment have more
options than strictly
focusing on companies
that offer Earth-friendly products or
Companies that make solar energy
panels, electric vehicles or household
products sourced from sustainable ma-
terials may fit the bill, but not neces-
sarily offer attractive returns.
Brown Advisory Funds' Sustaina-
ble Growth Fund (BIAWX) keeps this
in mind. It focuses on companies that
are growing even as they use environ-
mentally sustainable practices in their
business or offer a service or product
that helps other companies do the same.
That means the fund has lots of big-
name companies that one wouldn't im-
mediately think of as having a green or
environmentally friendly focus, such as
Amazon.com, UnitedHealth, Facebook
The fund lagged its benchmark in-
dex last year, the Russell 1000 Growth
index, but its annualised returns have
been nearly identical to the index since
its inception in 2012.
Karina Funk, co-portfolio manag-
er of the fund, weighs in on how the
fund is expanding the definition of
environmentally conscious invest-
ing. Answers have been edited for
length and clarity:
you look for
The way to make money on companies
that have sustainability characteristics
is to start with fundamentally strong
companies. A green or sustainability
thesis is not a silver bullet for automat-
ically making money or losing money.
So there are three primary character-
istics that we require in our portfolio
They must be fundamentally strong.
They must have sustainable advantages.
And we also must buy them at attractive
With these criteria, we believe we
find the management teams that are
making the right investments in their
own long-term sustainability, in their
own economic self-interest, so they can
compete and continue to be a part of
our everyday lives for decades to come,
and that is in line with our long-term
For us, sustainability is a means and
not an end in and of itself.
Our end goal is to invest in companies
that will outperform the broad market.
And one of our means of doing this is to
find fundamentally strong companies
that are using sustainability strategies
to add value for shareholders.
How do you
it a good fit for
We need to see evidence of sustain-
ability adding value in very specific
ways, either through stronger revenue
growth and improved cost structure,
which improves margins, or increased
customer loyalty, or what we call en-
hanced franchise value.
In terms of growing revenues faster,
this could be by offering a product or
service that helps customers reduce
their cost of doing business by reduc-
ing or eliminating certain materials or
equipment, saving on energy, saving
on chemicals, water, inputs or outputs.
In short, it's about helping to drive
productivity and efficiency for their
customers and saving them money.
What's a good
example of a
service fits this
O Smith. They make the highest ef-
ficiency water heaters on the market
and for really high volume use cases,
like hotels or hospitals, you can get a
payback on energy savings alone in less
than three years, and that's really com-
pelling for high-volume water users.
So that's an example of a product or
service that has a compelling growth
Fund manager Q&A
driver, because they improve productivity or effi-
ciency for the end customers.
Is it more important that
a company is making an
product versus, say, just
operating in a way that
makes their business
\We truly believe you can find sustainability drivers
in just about every sector of the economy, but they're
not easy to find.
When you look at our holdings it looks like a large-
cap growth fund, but I can tell you that it's a large-cap
growth fund where we avail ourselves of information
that most money managers miss.
Amazon is our top holding. It's companies like Am-
azon that are important sustainability investments
in ways that move the needle on environmental and
sustainability profiles in more significant ways than
some smaller companies.
They can leverage (their) IT system for thousands
of customers external to them and provide compu-
tational resources in real time that have literally
eliminated the needs of many companies to build
up their own data servers and storage and compu-
So that is significant in terms of reducing hardware,
software and energy usage.
It's not like there's some database out there that
tells us that Amazon is green. We're willing to invest
in these strong sustainability drivers before it might
be recognised by the market.
So, when you look at our portfolio, there's a strong
sustainability driver for every single one of those,
even though they may not be in your usual suspect,
green sectors like renewable energy.
In a nutshell, we're looking for fundamentally
strong companies that are outperforming in part
of, not despite, their sustainability strategies.
Karina Funk, co-portfolio manager of Brown Advisory
Funds' Sustainable Growth Fund.
CariCRIS is pleased to partner with Fitch Learning to host a workshop on
Best Practices in Financial Modeling and Valuation
March 14 & 15, 2017
Courtyard by Marriott, Port of Spain, Trinidad
By the end of this course, participants will be able to:
Balance Sheet and Cash Flow)
To register call or email
• Ms. Sita Son
Fitch Learning is the professional training arm of the globally-recognized Fitch
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