How does the M&G Positive Impact Fund offer access to impact investing as an equity fund?
The fund invests globally in equities of companies that have a positive impact on society involved in some of the world’s major social or environmental problems. The impact must be fully aligned with the company’s strategy and account for the majority of its business activities. We focus the fund on six areas of impact, three environmental and three social.
Are the two categories environment and social impact equally weighted in the fund?
We don’t have a hard division rule. So far, however, the categories have each accounted for around half of the portfolio, with a slight overhang in the social segment.
This is mainly due to the fact that our “Better Health” impact area accounts for about one third of the total portfolio. Our focus is not on the large pharmaceutical groups, but niche companies with innovative approaches.
Do you have an example?
ALK-Abelló is a specialist in allergy immunotherapy. The treatment not only addresses the symptoms, but also the triggers. Over 500 million people suffer from allergies such as hay fever, which is closely linked to allergic asthma. However, there are only 4.5 million people, less than one percent, in treatment. ALK has the potential to improve the lives of a significant proportion of the world’s population.
You address the United Nations sustainable development goals. How important are these for your strategy?
The SDGs are a solid and accepted framework for identifying key areas of impact, and it helps measure how the positive impacts have been achieved. We use the SDG framework for the fund. We assign all our investments to an SDG and define specific key performance indicators to measure the impact achieved.
Do you seek a dialogue with companies to influence their behaviour in terms of sustainability?
We believe that through engagement with the portfolio companies, impact investors can bring a variety of changes, not only promoting responsible behaviour and long-term thinking, but also pushing them towards greater transparency or stronger sustainability goals. Even companies with a strong positive impact can improve. For example, a wind turbine manufacturer that has a clear environmental goal may have a relatively large CO2 footprint, or may need to improve workers’ rights or address safety concerns.
Is there a compromise on performance when it comes to impact investing?
On the contrary, we believe that companies that achieve a positive social impact as well as a return on equity have a strong tailwind. Especially companies whose products or services meet acute social or ecological needs are likely to show strong growth characteristics. Our fund therefore aims to outperform the broad global equity market over a five-year period.
About John William Olsen, M&G Investments
John William Olsen, a Danish national, joined M&G in April 2014, and was appointed fund manager of the M&G Global Select Fund and M&G Pan European Select Fund in July 2014. He was later appointed deputy manager of the M&G Pan European Select Smaller Companies Fund in July 2016 and the M&G Positive Impact Fund in November 2018. John William joined M&G from Danske Capital, where from 2002 he had managed non-domestic equity portfolios, including the Global Stock Picking and Global Select equity funds, and also the European Select strategy. He joined Danske Capital in 1998 as a fund manager on the domestic Danish equities team, and in 2000 also became a global sector analyst focusing on technology and telecommunications stocks. John William gained a BA in business economics and then an MSc in finance and accounting from Copenhagen Business School.