Aviva Investors' chief investment officer for equities, David Cumming, discusses how his team have integrated ESG factors into their decision-making process
How do you consider ESG factors as part of your decision-making?
ESG is important. You've got regulation in financials, you've got labour issues in retail, you've got carbon footprint in oil, you've got extraction; there are ESG factors everywhere in the market.
Aviva Investors has always had a good reputation at every level of ESG. Being involved in the UN Charter, we sponsored the recent change in terms of how Shell look at their remuneration, which was linked to their carbon footprint and climate change. So, we've been active at that high level.
I think if you do it well and you can integrate it into the investment decision-making process in terms of information flow, then it can improve stock selection.
Do you have a common investment philosophy across the range?
Yes. When dealing against passive, you've got to make sure you're taking bets. To that end we take the view that the future and the past are different, so we believe in a high active share and future focused approach.
You can't do that with passive ETFs because they're all correlated to the past.
Our competitive advantage is at the micro end because we have good company access and our information flow is strong. As well as being fundamental in approach our other investment style is ‘agnostic' which means we're not ‘style neutral' but neither are we in the ‘always growth, always value' camp. It depends on where we see the opportunities.
You have recently overhauled your UK equity range. What are the new mandates designed to do?
Yes, we've renamed some of the portfolios and moved them into slightly clearer areas because before there was too much overlap. We've also strengthened our key regional teams.
What we're trying to do is ‘institutionalise' our retail proposition. In other words, making sure we have a common investment language, processes, and a clear proposition in terms of philosophy.
So, we now have an unconstrained fund, a small cap, a small/mid cap, an income fund and a high alpha fund which is benchmark sensitive. I manage the high alpha fund.
As other capabilities are brought to bear, we'll strengthen our products outside the UK as well.
Click here to learn more about Aviva Investors' repositioned UK equity range