Sustainability

ESG approach in the FISCH Umbrella Fund

The sub-funds of the FISCH UMBRELLA FUND invest their assets globally. They follow a defensive, dynamic or opportunistic investment policy based on fundamental financial analysis. A focus on quality and longer-term factors take precedence over short-term optimisation of returns with a higher risk exposure. The investment objectives of the sub-funds are partly determined by the name of the sub-funds.

Unless the sub-fund is explicitly designated "sustainable", ESG issues are considered in the fundamental assessment of securities and issuers, but are not binding in the investment decision-making process:

Assessment of ESG issues to determine risk;
Active engagement with issuers;
Assessing whether an issue leads to the exclusion of an issuer from investment considerations or justifies a higher risk premium.

The Sub-Funds may be invested globally. Certain sectors or countries are only systematically excluded if they are subject to economic sanctions.

The following table provides an overview of the factors used to integrate ESG issues in the investment process:

ESG-Integration means the consideration of ESG criteria in the research process for risk and return reasons.

Engagement refers to the dialogue with the issuers in order to better understand the risks and, if necessary, to improve the issuers’ ESG practices.

Exclusion means the complete exclusion of issuers involved to a certain degree in the development, production, maintenance, trade, etc. of controversial weapons (e.g. cluster munitions, anti-personnel mines).

Extended exclusion means excluding issuers operating in the defence and weapons industry, nuclear power, coal mining and/or processing of oil sands, genetic engineering (medicine, agriculture), tobacco and adult entertainment as well as issuers that violate human rights.

Best-in-class/Best-of-class refers to the combination of issuer rating (best-in-class) and sector rating (best-of-class) when assessing issuers.

(√) indicates indirect consideration for target funds and direct investments managed by the investment manager.

The ESG approach is divided into the following steps:

1. ESG awareness
Issuer research is conducted at the discretion of the Investment Manager based on publicly available information, issuer publications and third party research.

2. ESG integration
The Investment Manager's analysts assess the impact of the ESG aspects analysed (sector-dependent issues such as, for example, carbon emissions, biodiversity and land use, product safety and quality, occupational health and safety, labour relations, corporate governance and corruption & instability) on the issuer's business and regulatory risks, cash flow and its stability, and valuation (premium or discount to comparable issuers).

3. ESG assessment
The Investment Manager makes an absolute classification of the issuer in terms of ESG risks and classifies the issuer as "low risk", "medium risk" or "high risk". This classification is part of the fundamental assessment.

4. ESG engagement
Where particular ESG risks are essential to the investment decision, the Investment Manager conducts more in-depth analysis and, if necessary, engage in dialogue with the issuer. The purpose is to better assess ESG risk and, where appropriate, influence the issuer's ESG policies to mitigate risk. The Investment Manager monitors and documents whether the issuer is taking the necessary steps.

5. Exclusion
If, in the investment manager’s opinion, the management of an issuer is not prepared to address and mitigate the principal key ESG risks identified and risk assessment remains difficult and/or weak governance either does not improve or deteriorates, the investment manager’s ESG Committee may exclude the issuer from the investment universe.

The adverse impacts of investment decisions on sustainability factors are dependent on numerous factors and are not assessed due to, among other things, limited data availability and a lack of standardised assessment models.

Sustainability risks

A sustainability risk means an environmental, social or corporate governance event or condition that, if it occurrs could cause an actual or potential material adverse impact on the value of the investment and the performance of the sub-funds.

The application of ESG criteria does not protect the performance of the individual Sub-Funds from sustainability risks.

The application of ESG criteria may exclude securities from the Sub-Funds or underweight them relative to the benchmark. This may lead to higher deviations compared to the corresponding benchmark performance of a sub-fund.

By applying ESG criteria, securities may be excluded from the investment universe of a sub-fund or underweighted compared to the benchmark. This may result in higher deviations from the corresponding benchmark performance of a sub-fund, if applicable.

FISCH Convertible Global Sustainable Fund

The FISCH Convertible Global Sustainable Fund (the “Sub-Fund”) promotes environmental or social characteristics within the meaning of Art. 8 of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (the “SFDR”).

(a) Investment strategy, ESG-approach and methodology
The Sub-Fund invests its assets globally. It follows a dynamic investment policy that is based on fundamental financial analysis criteria and is committed to the principles of sustainability. Quality thinking and long-term considerations have priority over short-term, risky yield optimization. The investment objective of the Sub-Fund is determined partly by the name of the Sub-Fund.

The Sub-Fund is managed in accordance with the ESG approach described above and additionally combines exclusion criteria with a “best-in-class" or "best-of-class" approach to ensure that all potential investments take sustainability risks into account.

(b) Environmental or social characteristics of the financial product
The Sub-Fund invests in securities issued by countries, organizations and companies that contribute to sustainable business practices. These countries are characterized by the lowest possible and most efficient use of environmental and social resources. Organizations integrate sustainability in the use of funds and also measure success from a sustainable perspective. Companies are characterized by the fact that they make environmentally friendly, eco-efficient management and the proactive design of relationships with key stakeholders (e.g. employees, customers, financiers, shareholders, public authorities) an important part of their strategy. Individual countries, organizations, industries can be excluded. The Sub-Fund excludes companies in the defense and arms industry, nuclear energy, coal mining and / or processing of oil sands, genetic engineering (medicine, agriculture), tobacco, adult entertainment and companies that violate human rights.

(c) Monitoring of environmental or social characteristics
As part of its portfolio reviews, the investment manager is monitoring companies with high ESG risk. In the event of heightened ESG risks that are of material importance for the Sub-Fund, the portfolio manager will seek dialogue with the company, with the intention of improving the company’s ESG guidelines, in order to reduce investment risk. The portfolio manager monitors and documents whether the company has undertaken the necessary steps to address the issues that have been raised.

(d) Data sources and processing
The portfolio manager uses MSCI ESG research data as an important input to form an opinion on ESG opportunities and risks (low-risk, medium-risk, high-risk) for the Sub-Fund. However, under certain circumstances, the credit analysts’ assessment of a company may deviate from MSCI’s.

(e) No sustainable investment objective
The Sub-Fund promotes environmental or social characteristics, but does not have as its objective a sustainable investment.