Fund of the Month January 2020

The latest fund tip, hand-picked by our Investment Guidance team.

Article updated: 13 January 2020 8:00am Author: Lucinda Gregory


Our Fund of the Month for January is BMO Responsible Global Equity Fund (income and accumulation)

Reasons to buy

  • Among the top quartile of performers in the global equity sector over 1, 3 and 5 year periods.
  • A good option for responsibly minded investors.
  • BMO are one of the leading players within the field of Responsible Investing winning Investment Weeks ‘Best ESG (Environmental, Social & Governance)/SRI/Impact Research team’ for the last two years.
  • The team actively engage with companies on ESG issues as a central part of their investment philosophy.
  • The managers focus on high quality growth demonstrating a clear commitment to sustainability.

Things to be wary of

  • Due to the fund’s high active share (the % of stocks held differing to the benchmark) it may experience short term areas of volatility and underperformance.
  • Investors should be aware that the funds high exposure to the technology sector (as at November 2019 c.26%) may make it unsuitable for the more cautious investor.

About the fund

The objective of this fund is to achieve long term capital growth by investing in companies whose products and operations are considered to be making a positive contribution to society. The fund avoids investment in companies with damaging or unsustainable business practices.

The fund is managed by Jamie Jenkins, head of BMO Global Asset Managements’ Responsible Global Equities team, and Nick Henderson since 2013 and 2016 respectively.

Managers look for high quality businesses with strong management and governance at an attractive price. Their aim is to invest in companies that are driving change within the industry – for example tackling big environmental issues or improving worldwide financial literacy.

Companies considered for investment will first undergo screening by members of the Responsible Investment (RI) team to determine whether they meet the criteria for inclusion.

The team will exclude companies with exposure to any business activities deemed to be socially or environmentally damaging such as gambling companies, those who produce alcohol, generators of nuclear power or businesses with oil, gas or coal reserves. The fund will also not invest in ‘sin’ stocks – companies involved in the manufacture of pornography, tobacco or weapons.

The managers have an ongoing relationship with the companies they invest in (as at Nov 2019 there were 52 holdings) encouraging them to become more responsible in the way they go about their business. Active engagement is at the core of the manager’s investment philosophy and they will divest from companies if they do not believe they are engaging adequately, recently selling Amazon for this reason.

The 16 strong research team also under-take quarterly monitoring to ensure companies still meet the criteria for inclusion within the fund, reviewing any changes to the business and any controversies that may affect company ratings. This process is aided by the fund’s external Responsible Investment Advisory Council who review the approvability ratings of companies as well as developing the Fund’s screening criteria and targeting engagement activity.

Portfolio positioning and performance

The fund has a focus on large-cap companies with its top ten including international names such as Apple and Microsoft. Whilst some of the names may not be an obvious ‘responsible’ choice at first glance these companies would have passed the manager’s strict investment criteria. For example some may have been chosen for their use of renewable energy across their business operations (Apple) or for having a ‘light manufacturing footprint’ (Microsoft).

The managers believe a big opportunity lies in a collision between tech and healthcare sectors, an example of which is Apple with their Health app. The US is well positioned for this trend and this accounts for it being the fund’s largest country weighting at approx. 57% of the portfolio. Other top sector allocations are Healthcare, Financial services and Industrials.

Due to the fund’s high active share (the % of stocks held differing to the benchmark) it may experience short term areas of volatility and underperformance. However the fund is amongst the top quartile of performers in the global equity sector over 1, 3 and 5 year periods dispelling the myth that those who invest with their principles will sacrifice profits.

Risk rating M5

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Lucinda Gregory portrait photo
Lucinda Gregory

Investment Research & Guidance Manager

Lucinda has significant experience working in the fund management industry having previously worked at J.P. Morgan. She currently manages our team of analysts who are leading the company’s sell-side proposition and are responsible for our range of preferred lists.

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