US Institutional Sustainable Real Return

Strategy Highlights

  • Sustainability assessments look beyond the financial statements, alongside fundamental bottom-up research and security valuation analysis
  • Investing in issuers that positively manage the material impacts of their operations and products on the environment and society
  • Actively omitting issuers involved in areas of high social cost, environmental degradation or violation of the UN Global Compact Principles
  • Seeks to achieve its objective with reduced volatility through security selection, asset-type flexibility and an emphasis on capital preservation

This strategy is offered by Newton Investment Management Ltd (‘NIM’). NIM is part of the Newton Investment Management Group.
Learn more about our multidimensional investment philosophy

Strategy Profile

Objective

The strategy seeks to deliver a total return of SOFR (30-day compounded) +4% per annum over rolling 5-year periods, from a globally diversified portfolio of securities that demonstrate attractive investment attributes and sustainable business practices. In doing so, the strategy aims to achieve a positive return on a rolling 3-year basis. However, a positive return is not guaranteed and a capital loss may occur.

Performance benchmark

SOFR (30-day compounded) +4%*

*Please note that on November 1, 2021, the performance benchmark for this strategy changed from 1-month USD LIBOR +4% to SOFR (30-day compounded) +4%.

Volatility

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

Sustainable investment restrictions

Strategies that follow the Newton sustainable investment process 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.

Strategy inception

Composite inception: May 1, 2018

Investment Team

Our Sustainable Real Return strategy is managed by an experienced team with a wide range of backgrounds. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, responsible investment, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

Want to find out more?

Contact us

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

Catherine Doyle
Catherine Doyle

Investment specialist

Chris King
Chris King

Portfolio manager, Real Return team

Insights

Article

Sustainability and Stewardship 2023 Annual Report

We set out our approach to stewardship.
May 14, 2024
Nutrition and health: what are the investment implications?
Article

Nutrition and Health: What Are the Investment Implications?

Why we believe nutrition and health should be key considerations for investors.
December 29, 2023
Defence stocks and ESG
Blog

Defense Stocks and ESG

We outline the key ESG issues related to defense and how we integrate these in our investment approach.
August 22, 2022 Sakshi Bahl

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.

Newton will make investment decisions that are not based solely on ESG criteria. Other attributes of an investment may outweigh ESG analysis when making investment decisions. The way that ESG and sustainability criteria are assessed and the evaluation of their suitability for Newton’s sustainable strategies may vary depending on the asset class and strategy involved. For Newton’s sustainable strategies, ESG analysis is performed prior to investment for corporate investments (single name equity and fixed-income securities). The analysis will then also follow the Newton sustainable investment process to ensure it fits with the wider Newton sustainable investment philosophy.

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 programs. 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.
  • Sustainable Strategies Risk: The strategy follows a sustainable investment approach, which may cause it to perform differently from strategies that have a similar objective but which do not integrate sustainable investment criteria when selecting securities.
  • 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.