Analysis of the Multilabel SICAV Fund – Ethical ESG Global Equity
1 FEB, 2024
By Andrea Sepúlveda from LatamSelf
The Etica ESG Global Equity Fund was launched in December 2019, opening the possibility of evaluating its results and strategy over a three-year period. In this article, we will explore the key elements of this fund, examining its structure, investment strategy, and performance.
Strategy and investment philosophy
The strategy is part of the range of funds domiciled in Luxembourg by Etica Funds, an Italian management company committed to the research of ethical finance and responsible ESG investments since 2000.
The investment team, composed of Sofia Pescia, Carla Scarano, Pierluca Beltramelli, and Nicolò Vezzoso, applies a philosophy that combines financial analysis with ESG analysis, favoring companies with a high sustainability profile and significant growth potential.
Allocation and diversification
The fund adopts a global and diversified view, allocating at least 70% of assets to shares of companies listed on regulated markets in Europe, North America, and the Pacific area, including the Japanese region. Its flexibility also allows investments in bank deposits, liquid instruments, and currency risk hedging.
Active management and freedom of choice
Unlike many funds, the Etica ESG Global Equity Fund is actively managed and is not tied to a particular benchmark index. This freedom allows the investment team to select investments and determine their weighting according to their evaluation. Despite the absence of a benchmark in the strategy, investors tend to consider this fund as part of a global blend equity category to analyze it without the ESG bias.
Indicators and performance
At the end of December 2023, the fund had exceeded ~30 million USD in managed assets. The performance analysis of the fund is based on data from external sources, which use benchmarks such as Morningstar Gbl TME NR USD and Global Large Cap Blend Equity to compare its behavior over time.
Fund evolution
Even though the fund does not have a benchmark that the investment team considers appropriate, it is suggested to consider a Global Equity type benchmark for comparison and better understanding of interested investors. Here the behavior of the fund is examined in relation to a category of this kind over different time horizons:
| 5 years | 3 years | 1 year | 6 months | 3 months | 1 month | |
| Multilabel SICAV-ETICA SGR Global Equity C EUR acc | -- | +5.46% | +5.46% | +3.98% | +10.39% | +0.90% |
| Global Large-Cap Blend Equity | +9.47% | +5.95% | +10.03% | +5.22% | +8.90% | +1.24% |
| Fund quartile | -- | 3rd | 4th | 3rd | 2nd | 3rd |
| Funds Category | 1468 | 1872 | 2359 | 2504 | 2575 | 2652 |
Considering the benchmark assigned by this external source as the most appropriate for comparing the strategy, it can be stated that the fund is close to its 3-year category.
It is a fund that has a 3-year Beta less than 1, which indicates that it is more conservative than the category of funds it is compared with.
Other indicators of the Ethical ESG Global Equity Fund
| Large positions | ||
| Security | % | |
| Nvidia Corp | US | 2.64 |
| Adobe Systems Inc | US | 1.68 |
| Inter Corp | US | 1.53 |
| Qualcomm Inc | US | 1.52 |
| LINDE PLC | US | 1.47 |
| Total | 8.84 |
It is a fund that favors the United States and other developed countries in its allocation, which is predictable given the ESG orientation of the strategy, as these are the countries where it is possible to find more companies that take into account such considerations.
Conclusions
Advantages:
- Belongs to a management company whose focus is ASG investment, so the team has all the support to implement its own philosophy and manage the fund looking for opportunities in this area.
- It is an option for clients looking for strategies with an ASG approach and aligned with the United Nations Sustainable Development Goals.
Disadvantages:
- Its size is still small to be considered within an institutional portfolio.
- Despite its ASG focus, the fund needs to be more competitive in the category where an institution would place it to compete.
