The Real Return (Responsible) strategy was formerly referred to as the Sustainable Real Return strategy. The strategy has been renamed in order to comply with naming and marketing rules under the UK Sustainability Disclosure Requirements.

Strategy highlights

  • Investing in issuers that demonstrate positive sustainability characteristics by either contributing to or aligning with Newton’s proprietary sustainable investment themes
  • Actively omitting issuers involved in areas deemed to be harmful from an environmental or social perspective, as well as those that violate the UN Global Compact Principles
  • At least 70% of portfolio invested in securities that demonstrate sustainability characteristics
  • Sustainability assessments look beyond the financial statements, alongside fundamental bottom-up research and security analysis
  • Seeks to achieve its objective with reduced volatility through security selection, asset-type flexibility and an emphasis on capital preservation
Learn more about our multidimensional investment philosophy

Strategy profile

Objective

The strategy seeks to deliver positive returns on a rolling annualised three-year basis after fees. The strategy aims to deliver positive returns before fees within a range of cash (SONIA (30-day compounded)) on a rolling annualised three-year basis and cash (SONIA (30-day compounded)) + 4% per annum on a rolling annualised five-year basis. However, positive returns are not guaranteed and a capital loss may occur.

Performance benchmark

The strategy will measure its performance before fees against SONIA (30-day compounded) on a rolling annualised three-year basis (the ‘three-year benchmark’) and SONIA (30-day compounded) +4% per annum on a rolling annualised five-year basis (the ‘five-year benchmark’).*

Volatility

Expected to be between that of bonds and equities over the long term

Sustainable investment restrictions

Strategies that follow the Newton sustainable investment framework are subject to a set of minimum exclusions referred to as ‘sustainable investment restrictions’. These restrictions include companies involved in or that generate a material proportion of revenues from activities that are deemed to be harmful from an environmental or social perspective.

Literature

Key Investor Information Document (KIID)
Prospectus
UK SDR Consumer Facing Disclosure

* Please note that on 1 October 2021, the performance benchmark for this strategy changed from 1-month GBP LIBOR +4% to SONIA (30-day compounded) +4%.
RI report Sustainable real return

Responsible investment report

Stewardship activities (voting and engagement) for the last quarter and ESG metrics.

Download Report

Investment team

The strategy is managed by an experienced team with a wide range of backgrounds and has dedicated support from Newton’s responsible investment team. In-house research analysts are at the core of our investment process, and our multidimensional research capabilities help to promote better-informed investment decisions.

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Philip Shucksmith
Philip Shucksmith

Portfolio manager, Real Return team

Matthew Brown
Matthew Brown

Portfolio manager, Real Return team

Andy Warwick
Andy Warwick

Co-head of Real Return team

Aron Pataki
Aron Pataki

Co-head of Real Return team

Lars Middleton
Lars Middleton

Portfolio manager, Real Return team

Brendan Mulhern
Brendan Mulhern

Global strategist, Real Return team

Aaron Sinadjan
Aaron Sinadjan

Portfolio analyst, Real Return team

Chris King
Chris King

Portfolio manager, Real Return team

Catherine Doyle
Catherine Doyle

Investment specialist

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

The strategy does not seek a specific sustainability outcome as part of its investment objective, but in pursuing its investment objective a minimum of 70% of holdings will be invested in securities assessed to have sustainability characteristics, in accordance with the Newton sustainable investment framework. This strategy does not have a UK sustainable investment label.

Key investment risks

  • Performance aim risk: The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for returns to vary significantly.
  • Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
  • Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.
  • Credit ratings and unrated securities risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.
  • Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.
  • Emerging markets risk: Emerging Markets have additional risks due to less-developed market practices.
  • Shanghai-Hong Kong Stock Connect and/or the Shenzhen-Hong Kong Stock Connect (‘Stock Connect’) risk: The strategy may invest in China A shares through Stock Connect programmes. These may be subject to regulatory changes and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.
  • China Interbank Bond Market and Bond Connect risk: The strategy may invest in China interbank bond market through connection between the related Mainland and Hong Kong financial infrastructure institutions. These may be subject to regulatory changes, settlement risk and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.
  • CoCos risk: Contingent convertible securities (CoCos) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.
  • Responsible investing risk: The investment policy for this strategy places restrictions on its exposure to certain sectors or types of investments to reflect its responsible investing approach. The strategy’s performance may be negatively impacted due to these restrictions in comparison to strategies which do not have these restrictions. The strategy will not engage in securities lending activities and, therefore, may forego any additional returns that may be produced through such activities.
  • Investment in infrastructure companies risk: The value of investments in infrastructure companies may be negatively impacted by changes in the regulatory, economic or political environment in which they operate.
  • Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.

Insights

Article

Sustainability and stewardship 2023 annual report

We set out our approach to stewardship and how we strive to meet the UK Stewardship Code’s principles.
10 May 2024