Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors and the role your fund could play in an investor's portfolio? How do you structure this fund?
The strategy offers investors a high-conviction sustainable equity portfolio, which could be considered as a core allocation. The approach utilises Federated Hermes expertise across ESG integration, engagement & impact investing to invest in "Leaders", "Improvers" & "Impact" stocks to construct a more diversified portfolio.
The strategy is invested across a wide range of compelling companies, from growth to quality and value, from small/mid-cap through to mega-cap, and across both developed and emerging markets. Above all, the strategy seeks to deliver strong financial returns for clients through investment in companies whose products, operations and activities contribute towards a more sustainable future.
What do you see as the big opportunities and risks for your strategy?
Federated Hermes has a long history in ESG integration, deep expertise in impact investing, and a best-in-class engagement and stewardship capability in the form of EOS at Federated Hermes Limited*. The big opportunity is to utilise this expertise to better understand the risk and reward in individual companies. Then through careful portfolio construction, a thorough process, and patience, we believe we can deliver alpha to our clients. As with any strategy there are short-term macro-economic risks which can affect returns. Over the longer-term, the strategy is designed to weather different economic environments, and hence the longer-term risk is less pronounced.
Can you identify a couple of key investment opportunities you are playing at the moment in the portfolio? This could be at a stock, sector or thematic level.
From a portfolio point of view, one of the key investment opportunities sits in the allocation to "Improvers". These are stocks which are typically less-well held, and thus offer greater discovery value and often greater engagement potential. Other features of improvers is that they are often earlier/higher in the value chain, and over-index to Emerging Markets. Within the portfolio the allocation to Improvers has been increasing steadily given the improving risk/reward profile on offer.
Thematically, the portfolio is exposed to a variety of compelling long-term themes. One that remains prominent in the portfolio is the opportunity in stocks enabling a more circular economy. From recycling to remanufacturing and repairing, there is considerable financial reward on offer for companies to capture. Within the portfolio there is exposure both to companies whose products provide circular economy solutions, and to those where it is benefitting them operationally through greater efficiency.
*EOS at Federated Hermes (EOS) is a world-leading stewardship service provider. Founded in 2004 on a legacy dating back to 1983, EOS advises on more than $1.8tn (as at 30 June 2024) in assets to deliver corporate engagement and proxy voting services.
The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. Any investments overseas may be affected by currency exchange rates. Past performance is not a reliable indicator of future results and targets are not guaranteed.
The fund has environmental and/or social characteristics and so may perform differently to other funds, as its exposures reflect its sustainability criteria.
For professional investors only. This is a marketing communication. This document does not constitute a solicitation or offer to any person to buy or sell any related securities, financial instruments or products; nor does it constitute an offer to purchase securities to any person in the United States or to any US Person as such term is defined under the US Securities Exchange Act of 1933. It pays no regard to an individual's investment objectives or financial needs of any recipient. No action should be taken or omitted to be taken based on this document. Tax treatment depends on personal circumstances and may change. This document is not advice on legal, taxation or investment matters so investors must rely on their own examination of such matters or seek advice. Before making any investment (new or continuous), please consult a professional and/or investment adviser as to its suitability. All figures, unless otherwise indicated, are sourced from Federated Hermes. Whilst Federated Hermes has attempted to ensure the accuracy of the data it is reporting, it makes no representations or warranties, expressed or implied, as to the accuracy or completeness of the information reported. The data contained in this document is for informational purposes only, and should not be relied upon to make investment decisions. Federated Hermes shall not be liable for any loss or damage resulting from the use of any information contained on these pages. All performance includes reinvestment of dividends and other earnings.
Federated Hermes Investment Funds plc ("FHIF") is an open-ended investment company with variable capital and with segregated liability between its sub-funds (each, a "Fund"). FHIF is incorporated in Ireland and authorised by the Central Bank of Ireland ("CBI"). FHIF appoints Hermes Fund Managers Ireland Limited ("HFMIL") as its management company. HFMIL is authorised and regulated by the CBI. Further information on investment products and any associated risks can be found in the prospectus, the fund supplements or the key investor information documents/key information documents, the articles of association as well as the annual and semi-annual reports. In the case of any inconsistency between the descriptions or terms in this document and the prospectus, the prospectus shall prevail. Details of the Manager's Remuneration Policy and Sustainable Policies are available on the Policies and Disclosures page at https://www.hermes-investment.com/ie/hermes-ireland-policies-and-disclosures/, including: (a) a description of how remuneration and benefits are calculated; and b) Sustainability related policy and disclosures. All offering documents are available free of charge (i) at the office of the Administrator, Northern Trust International Fund Administration Services (Ireland) Limited, Georges Court, 54- 62 Townsend Street, Dublin 2, Ireland. Tel (+ 353) 1 434 5002 / Fax (+ 353) 1 531 8595; (ii) at https://www.hermes-investment.com/ie/; (iii) at the office of its representative in Switzerland (ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich www.acolin.com). The paying agent in Switzerland is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, CH-8024 Zurich. The information provided herein does not constitute an offer of the Fund in Switzerland pursuant to the Swiss Financial Services Act ("FinSA") and its implementing ordinance. This is solely an advertisement for the Fund pursuant to FinSA and its implementing ordinance. The costs for hedged share classes will be higher than the costs for non-hedged share classes. Refer to the prospectus or offering documents before making any final investment decisions and consider all fund characteristics and not just ESG characteristics.
Issued and approved by Hermes Fund Managers Ireland Limited ("HFMIL") which is authorised and regulated by the Central Bank of Ireland. Registered address: 7/8 Upper Mount Street, Dublin 2, Ireland, DO2 FT59. HFMIL appoints Hermes Investment Management Limited ("HIML") to undertake distribution activities in respect of the Fund in certain jurisdictions. HIML is authorised and regulated by the Financial Conduct Authority. Registered address: Sixth Floor, 150 Cheapside, London EC2V 6ET. Telephone calls may be recorded for training and monitoring purposes. Potential investors in the United Kingdom are advised that compensation may not be available under the United Kingdom Financial Services Compensation Scheme. Eligible European investors are advised that compensation may be available for certain eligible investments under the Ireland Investor Compensation Scheme.
