Where are you?
Over this period the Fund has delivered annualised outperformance of 0.65% (net of all fees) with a tight tracking error to the MSCI World, while simultaneously reducing ownership of carbon, water and waste by an average of 65%.**
The Smart Beta Fund launched following extensive research, correlation and attribution analysis on our proprietary Resource Efficiency Factor. At inception, we believed that if we could prove out the performance opportunity over an initial 3-year period, then the fund could become a viable, sustainable replacement product for an existing MSCI World exposure.
The Fund, initially seeded by a large European foundation, has now attracted investors from as far afield as Brazil. We would like to thank those investors, who have continued to support it, for their belief in the investment thesis and confidence in the company.
As pressure grows to adopt longer-term thinking and a more meanings-based approach to investment, it is vital for the team at Osmosis to continue to evidence that investing sustainably should not come at the cost of returns. This three year track record, delivered through some extraordinary market environments, further supports our investment thesis that those companies which consume less energy and water, and produce less waste relative to value creation are, all else equal, better-managed companies, and capable of generating greater shareholder value. The Fund also excludes tobacco companies and those companies in breach of the UN global compact, further enhancing its values proposition.
As the firm has scaled in size, we have enacted an active engagement program focussed on our core area of expertise, environmental disclosures. Encouraging companies to report and improve their environmental disclosures is now a key part of our investment process. We regularly engage with companies to better understand the materiality, context and accuracy of their data. A company that discloses its environmental footprint is more likely to manage, measure and reduce its impact.
Fund AUM is currently at ~$500m, and the Fund is daily traded in a UCITS vehicle with multiple share classes and a low TER. We hope that investors who are currently reviewing portfolios and evaluating their approach to sustainability will join Osmosis on the next part of our journey. We welcome these conversations.
* This Fund is not available to US investors. Separate accounts are available for US investors using the same model and investment objective of the Fund.
** The foot printing metrics above have been calculated using a Total Metrics approach, apportioning carbon emissions, water consumption and waste generation to the investor based on an equity ownership perspective. Calculating the “owned” emissions, water and waste from each position in the portfolio and benchmark, and adding those metrics yields the total impacts for the portfolio. The calculations have been based on metrics recorded in the MoRE DataBase where available, and industry averages have been used to estimate any gaps in the data coverage.
This document is issued by Osmosis (Holdings) Limited, a London based investment management group.