5 8GJUpcnIFP HxFeESf

Thematic alignment alone is not enough. We need to understand how funds are executing their investment strategy to ensure that they are actually delivering their objectives and are not just greenwashing. At this stage, we speak to the fund managers and go deep into the documentation to understand exactly how companies are selected, along with any general and theme specific exclusion criteria.

A methodology can look great on paper but until you see the output, it’s hard to detect how effective it is. We go through the underlying holdings to check if anything has slipped through the net. If anything seems out of the ordinary, we need to understand why and what can be done to fix it. Our partnership with Net Purpose arms us with the data needed to perform the analysis.

We keep an open dialogue with the managers, both during the selection process and after investment. As we are still relatively small in terms of the amount we invest, we feel that making our voice heard is even more important than letting the money do the talking. For example, we engaged with Rize ETF on the inclusion of animal products in the Sustainable Future of Food fund - the fund removed all meat and animal bi-products in September.

Revenue growth is one thing but investment returns are based on profits. We need to believe that any revenue growth will translate into higher profits in order to support our investment thesis.

Even the most profitable company in the world is not necessarily a good investment. Themes, funds and companies need to demonstrate reasonable valuations now and potential upside in the future.

Diversifying out thematic or sector risk is key in the portfolio construction process. Holding multiple funds that are perfectly correlated with each other would be detrimental to our total risk exposure so we pick funds with a low correlation to others in the portfolio.