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Research and White Paper

ESG and market inefficiency

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When the Global Equity team was formed back in 2006, we had two principles front of mind: i) that meeting our purpose of making a positive difference for clients would best be achieved through owning a portfolio of great businesses at attractive valuations and ii) that translating this into attractive returns would require robust portfolios that capture the value creation from the underlying businesses.

Our approach has always been to let the businesses in the portfolio drive returns.  We consider that over the long term there is no other investment opportunity that adds value quite like the compounding power of a great business.  This value creation ultimately should deliver positive absolute returns, but because great businesses are better than their peers, it should drive relative returns too.

Our view was that this was the best reward for the risk taken.  To divert any part of the risk budget to other risk sources was thus going to compromise the return. 

This was why the Global Equity team was created in this way, with a group of industry experts to identify great businesses by industry, and a risk and portfolio construction capability embedded within the team to ensure that the overall portfolio risk reflected our aims and purpose.