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The Challenges of Constructing a Sustainability Fund
Whose Brains?
ESG Data and Intellectual Property
Claudia Quiroz
Fund Manager
Cheviot Sustainable Investment
London Accord - Autumn Conference
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October 2010
What You Should Know Before We Start
• The Speaker – Claudia Quiroz
Climate Asset Fund
• 10 years of fund management experience
• Sustainable & Responsible investment specialist
Climate
Change
• The Company – Cheviot Asset Management
New
Economy
• Largest independent asset manager
• AUM £3.2 billion*
Resource
Scarcity
CONVERGENCE
Population
Growth
• The Fund – Climate Assets Fund
• Launched March 2010
Population – increase of 50% by 2050
• Investment themes
 Climate Change
 Population Growth
 Resource Scarcity
Energy – increase demand of 50% by 2030
* as at 30.09.10
Food – increase of demand of 50% by 2030
Water – increase of demand of 30% by 2030
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Challenges & Strategies of New Product Development
• Thinking Framework
– My MBA Text Book
• Challenges of Developing a New Product
– Analysing Industry & Competitors
» identifying market segments & selecting market target
– Identifying the Product’s USPs (Unique Selling Points)
» differentiating & positioning the market offering
– Understanding the Consumer’s Adoption Process
» analysing buying behaviour
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1. Analysing Industry & Competitors
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2. Identifying the Product’s USPs
• Investment Strategy
– Multi- asset / Multi-thematic
– Reduce Volatility / Increase Liquidity
• Investment Process
– Top-down
– Bottom-up
• Capital Appreciation & Income
– Dividends from equities
– Interest Income from coupons
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3. Understanding the Consumer’s Adoption Process
• Innovation
– The early adopter paradigm
• Track Record
– The new product dilemma
• Outperformance
– Past performance is not necessarily indicative of future performance
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Why Should Investors Look At Sustainability Investing?
• Government Support
Thematic Allocation of Green Stimulus
- Economic growth & job creation
• Growth
(USD 512bn)
Renewable, 8%
- High digits growth
Other Low
Carbon, 13%
• Consumer Preferences
- Makes economic sense
Energy
Efficiency,
63%
Buildings,
16%
LoC Vech,
4%
Rail, 25%
Grid, 18%
Water, 16%
Source: HSBC estimates, government announcements, Cheviot
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Key Takeaways
• “Fund” is no different from any other product
– General product development and marketing strategies
• Sustainability / Climate Change Investing is worth having
– Growth is key differentiator
• Consider the “Climate Assets Fund”
– Unique & innovative product
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Disclaimer
• The information provided in this document are from sources that Cheviot considers reliable but Cheviot
provides no guarantees as to the accuracy of this information. Information has been provided from
different sources including: the International Energy Agency (www.iea.org), the Intergovernmental
Panel on Climate Change (www.ipcc.ch) and the Food and Agriculture Organization (www.fao.org).
• The investment views reflect the current views of Cheviot's Sustainable Investment team which are
subject to change. The investments or services mentioned in this document may not be suitable for all
investors or be appropriate for their personal circumstances. If you are unsure as to whether the
investments described in this document are suitable for you, we strongly recommend you seek
professional advice from a financial adviser.
• Past performance is not necessarily indicative of future performance. The value of investments and the
income derived from them may fluctuate and you may not receive back the amount originally invested.
Currency movements may also affect the value of investments.
• Cheviot Asset Management Limited is authorised and regulated by the Financial Services Authority
and is a member firm of the London Stock Exchange.