Change to investment objective and policy, benchmark and name of Artemis SmartGARP Institutional Global Equity Fund

The investment objective and policy, benchmark and name of Artemis SmartGARP Institutional Global Equity Fund changed on 28 February 2022.

Last updated 28 February 2022

On 31 January 2022, an extraordinary general meeting took place at which a proposal to change the investment objective and policy, benchmark and name of Artemis SmartGARP Institutional Global Equity Fund (the "Fund") was approved. The effective date of the changes was 28 February 2022.

1. Amendments to the Fund’s investment objective and policy

The new investment objective is twofold:

  • firstly, to generate capital growth in excess of that of the MSCI ACWI Climate Paris-Aligned Index, after fees, on an annualised basis over rolling five-year periods, from a diversified portfolio of shares in companies that meet the Manager’s criteria for transitioning to a low-carbon economy.
  • secondly, the portfolio will have a weighted average implied temperature rise that is lower than 2 degrees Celsius. The portfolio’s weighted average implied temperature rise will be measured, monitored and regularly reported (at least quarterly) on the Artemis website.

Further detail on the Fund’s investment strategy is included in the letter to unitholders (see below). As part of the changes to the investment policy the following are excluded at the outset of the investment process:

  • companies which derive more than 1% revenue from mining or sale of thermal coal;
  • companies involved in making or making components of controversial weapons (including cluster munition, land mines, biological and chemical weapons);
  • companies that the Manager determines to be in breach of the United Nations Global Compact principles on human rights, labour rights, the environment and anti-corruption;
  • companies which derive more than 10% revenue from tobacco.

The Fund continues to be exposed to carbon intensive companies from other industries or sectors. This is because the climate transition will require significant structural changes in these sectors and selectively allocating capital to companies engaged in making the requisite changes is believed to facilitate climate transition more than disinvesting indiscriminately.

Whilst the Fund’s investment universe is reduced as a result of the exclusions, the Fund continues to be managed using the SmartGARP investment approach and follows a diversified global equity mandate. It is not expected that the risk profile of the Fund will materially change as a result of the proposed changes.

2. Change to the Fund’s benchmark, from MSCI All Country World Index to MSCI ACWI Climate Paris-Aligned Index (the “New Index”)

The New Index acts as a target benchmark that the Fund aims to outperform, after fees, on an annualised basis over rolling five-year periods. It is a broad global equity market index designed to help investors who seek to mitigate climate transition and physical risks, capture novel investment opportunities and allocate capital in a way that supports the decarbonisation of the economy while being compatible with the Paris Agreement. The New Index aims to represent the performance of an investment strategy that reweights or excludes securities based on the risks and opportunities associated with the climate transition, and follows a decarbonisation trajectory in order to align with the goals of the Paris Agreement, while seeking to minimise exclusions from the MSCI All Country World index. Management of the Fund is not restricted by the New Index.

3. Change to the Fund’s name, to “Artemis SmartGARP Paris-Aligned Global Equity Fund”

Why has Artemis made these changes?

Over the last few years, the impact of environmental considerations on stock prices has become increasingly pronounced. Consequently, the Fund’s investment team introduced an explicit ESG factor into SmartGARP and they continue to refine this input to their investment process. At the same time, the team have had increasing feedback from existing clients looking for a solution that goes beyond just having environmental considerations as one of many factors influencing investment decisions.

Against this backdrop, the Fund’s investment team have been developing a sophisticated new approach using third-party data to measure a company’s alignment with the goals of the Paris-agreement. A company’s “implied temperature rise” is measured; this measure has a strong methodological basis, has broad coverage of companies globally, is forward-looking and takes into consideration companies’ Scope 3 emissions (i.e. including all indirect greenhouse gas emissions that occur in a company’s value chain).

Having analysed the data and spoken with third-party researchers, the Fund’s investment team have determined that they now have data of sufficiently high quality to manage a fund with an explicit Paris-alignment constraint.

When did the changes take place?

The changes were approved by an extraordinary resolution of unitholders on 31 January 2022 and were effective on 28 February 2022 (the “Effective Date”).

Further information

For further information, please contact our Retail Client Services team by telephone on 0800 092 2051 (outside the UK +44 1268 445 401) between 8am and 6pm GMT (Monday to Friday), or by email at [email protected].

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Unit class affected

Artemis SmartGARP Paris-Aligned Global Equity Fund – accumulation units, GBP (ISIN: GB00B06J1T60)