What makes Zadig’s approach to sustainable investing so different from its contemporaries? Ian Penrose of iM Global Partner quizzes Louis Larère co-manager of the OYSTER Sustainable Europe fund on the team’s investment approach.
LL : Our approach began in early 2019, with the motto ‘Sustainability at a Reasonable Price’. We wanted to differentiate ourselves from the existing players in SRI with an approach focused on our strongest beliefs and diversified in terms of investment styles. We believe that there are many interesting sustainable investments outside the ‘growth’ sectors of the market. In fact, many good cyclical or value companies are often overlooked by SRI investors. We build a balanced portfolio of sustainability leaders and companies that are in transition. Many of these companies are overlooked by other investors so are trading at very interesting multiples. This helps us outperform the market while still retaining a high exposure to the United Nation’s Sustainable Development Goals.
Concentration is the result of our convictions; we simply believe that it is difficult to have 100 good investment ideas! The less concentrated you are, the more you resemble an index fund. We don’t believe that concentration is the enemy of diversification and risk management. In fact, we are very careful to invest across different factors and we know each company in the portfolio inside out. This concentrated and risk management approach has been used successfully for 15 years at Zadig Asset Management.
Director Distribution UK, Ireland and Scandinavia
We try to be as balanced as possible in terms of exposure to the different investment styles: value, growth, momentum, etc. so that our fund can perform in any environment. In this respect, we are very different from other SRI funds, which generally have a strong bias towards growth companies. This bias we feel has contributed to the good performance of many SRI funds in recent years as growth stocks have soared.
However, since the Pfizer vaccine announcements on November 9, 2020, value stocks have started to perform better and replace growth stocks. Our fund has performed very well recently, notably thanks to our more cyclical investments.
We are very different from other SRI funds, which generally have a strong bias towards growth companies
As we are aware of the numerous debates on ESG ratings, the frequent disagreements between the various rating agencies and the opacity of the processes. We have chosen to be pragmatic by anticipating the changes in European classification. Currently the rating agencies only target the "green share" of a company's activities. However, we take a broader approach by calculating a company’s percentage exposure to the UN’s Sustainable Development Goals. The environment, and climate change, are obviously included, but also health, education, access to information, etc. The fund has had the French SRI label since 2020 and will comply with the transparency requirements of Article 9 of SFDR as well.
We have chosen to be pragmatic by anticipating the changes in European classification
Founded in 2005 and based in London (United Kingdom) and Luxembourg, the firm manages long-only and market-neutral European equities strategies, with a high conviction, fundamental and style neutral approach.
The firm had $2.5bn AUM at the end of April 2021.Visit Zadig Asset Management