Selection of securities: ESG and financial analysis

The process

The defining characteristic of our mutual funds and Sicav sub-funds ^[1] is the scrupulous screening of the securities. We only accept issuers with proven sustainability credentials on social, environmental, governance and financial topics.

The selection process is structured into two phases: the ESG analysis and the financial analysis.

Our methodology

ESG EticApproach® is our proprietary methodology for selecting the securities that comprise the portfolio of the Etica System Funds of Etica Funds and the Sicav sub-funds.

The issuer selection methodology is reviewed and approved by our Board of Directors – which also determines the investment policy – on the advice of the AMC’s Ethics Committee, an independent and autonomous body formed of persons of high moral standing and recognised experience in the field of corporate social responsibility.

ESG analysis

Our ESG Analysis and Research team, composed of experienced analysts in the fields of environment, social and governance topics, subjects’ countries and companies to a dual screening process to identify the most socially and environmentally responsible countries and the businesses with the greatest focus on sustainability and collective wellbeing, creating the so-called investable universe.

Etica Funds’ Valori Responsabili Line and the Sicav sub-funds securities

The collective investment funds of Etica Funds’ Valori Responsabili Line and the Sicav sub-funds invest in businesses and countries than adopt responsible ESG (environment, social and governance) practices, adopting a global approach to topics and sectors. The Line currently comprises five collective investment funds which cover the main risk/return profiles.

Linea Futuri Responsabili securities

The collective investment funds of the Futuri Responsabili Line of Etica Funds focus in particular on a specific investment topic, and securities are selected based on a thorough analysis of issuers’ social and environmental responsibility. The Line currently comprises two collective investment funds: Etica Transizione Climatica, which focuses on the topic of climate change, and Etica Obiettivo Sociale, which focused on topics relating to employment, society and corporate governance.

The source of information on Countries and firms

The work of our ESG Analysis and Research Team is broadened by in-depth investigations depending on the particular contingencies of daily events.
We base our evaluation of the issuers on a plurality of sources: specialized databases containing reliable and up-to-date information; associated partners such as the ICCR (Interfaith Center on Corporate Responsibility), PRI (Principles for Responsible Investments), CDP (Carbon Disclosure Project), EUROSIF (European Social Investment Forum) and SfC (Shareholders for Change); NGOs such as Amnesty International and Legambiente; in addition, we examine research studies in the specialist press and the company’s corporate publications (financial statements, sustainability reports, etc.) and we evaluate the information gleaned from direct dialogue with the companies.

ESG risk

When defining the investable universe, our issuer selection process also considers – in addition to the negative and positive screening criteria – the ESG Risk metric (or E risk for Etica Transizione Climatica). This metric is used to reject all issuers that are the highest contributors to the portfolio risk and maintain a stable sustainability risk over time.

Financial analysis

When selecting the securities, the ESG analysis is supported by the financial analysis: the investment manager Anima Sgr, an independent asset management company, assesses the financial performances and selects, in the context of the Investable Universes defined by Etica, the best securities in terms of risk/return ratio, in accordance with the Investment Policy defined by Etica’s Investment Committee and approved by its Board of Directors.

[1] Three SICAV funds of the Luxembourg MULTILABEL SICAV, consisting of Carne Global Fund Managers (Luxembourg) S.A. (Carne LUX), Luxembourg, on behalf of Etica Sgr S.p.A, which is the investment manager and global distributor. Starting from February 1, 2024, the name of the Management Company is Carne Global Fund Managers (Luxembourg) S.A. (Carne LUX), following the acquisition of GAM (Luxembourg) S.A..

This is a marketing communication. The data and information contained herein are provided for information purposes only and do not constitute investment recommendations. This communication is not, and may not be regarded as, an information document required under applicable legislation, and its content is not sufficient to form the basis of an investment decision.

This communication does not take into account in any way the characteristics of any person who may receive or become aware of it. In particular, it does not take into account their investment objectives, knowledge and experience in investment matters, risk appetite and/or any other characteristics, including the applicable tax regime.

Past performance is not indicative of future results, and investments in funds are subject to risks relating to the underlying assets, which may affect the value of the relevant units. Etica SGR provides no guarantee of returns and does not guarantee the repayment of the capital invested. The SGR accepts no liability for any losses that may arise from the use of the information provided in this communication.

In order to make an informed investment decision, before making any final investment decision, investors should consult the Key Information Document (KID) and the funds’ Prospectus available at www.eticasgr.com.

The placement of the “Linea Valori Responsabili” and “Linea Futuri Responsabili” funds is only available in Italy. For further information, please refer to the Italian version of the website.