The Fulcrum Climate Change Fund has been designed to contribute to making financial flows aligned with the Paris Agreement’s temperature target. It seeks to generate excess returns above global equity markets as climate-alignment gets priced into the valuation differentials between companies, sectors, and countries. It is highly diversified across sectors and regions and invests in approximately 200 companies.
The Fund is based on a rigorously researched climate alignment temperature metric developed by environmental experts, and is committed to a weighted average portfolio temperature of below 2⁰C, with no individual company exceeding 2⁰C. It aims to play an important role in the reallocation of capital within and between companies and sectors in order to facilitate the green transition that furthers the Paris Agreement.
- Paris Agreement Temperature Target: Explicitly designed to contribute to making financial flows aligned with the Paris Agreement’s temperature target
- Highly Diversified: Provides strong diversification across regions and sectors with moderate levels of tracking error relative to traditional global equity market indices
- Thematic Approach: Provides exposure to a wide range of long-term themes that include the green economy whilst also allowing investors to take a diversified and global perspective in tackling the challenges of climate change
- Climate-Aligned: Uses a market leading climate alignment metric, enabling clear measurement of the alignment with global warming targets
- Engagement: Has a strong engagement component focused on encouraging science-based target setting and emission disclosure through direct and collaborative engagement
- Markets Have Not Priced in Climate Alignment Yet: Has the potential for “transition alpha” by being aligned with the transition to a low-carbon global economy
Idea Generation (the Why)
Proof of Concept (the How)
Review by Investment Committee
Implementation into the Fund
Investing based on temperature alignment
By using an innovative climate alignment measure, denoted by a temperature metric in degrees Celsius, we can measure the extent to which any individual company in our investment universe is aligned with the Paris Agreement’s temperature target. This is achieved by comparing a company’s decarbonisation pathway with the required carbon reduction pathway of its sector, allowing us to create a proxy for how prepared a company is for the low-carbon transition. The metric we use considers both historic Greenhouse Gas emissions and forward-looking net zero targets set by listed companies. The Fund has committed to maintaining a portfolio temperature of below 2⁰C.
The Fund is managed by the Fulcrum Equity Team, led by Fawaz Chaudhry. In addition, for impact management and engagement the team is supported by Matthew Roberts, Chair of Fulcrum’s Responsible Investment Committee. Deputy-CIO, Nabeel Abdoula, provides strategic direction in terms of engagement with the environmental scientists, developing an ever deeper understanding of the data set and to ensure the Fund is one that can be used to gain broad exposure to global equities.
Fawaz Chaudhry joined Fulcrum in 2017 and, as Head of Equities, is responsible for building the firm’s equity capability. A key member of the broader investment team, Fawaz is also the lead portfolio manager for the Fulcrum Thematic Equity Market Neutral Fund and Fulcrum Climate Change Fund. Prior to joining Fulcrum, Fawaz spent over fifteen years developing his long-term, thematic investment approach, including at Hadron Capital and Moore Capital.
Nabeel is Deputy CIO and a member of the Fulcrum Investment Team. Prior to joining Fulcrum in 2011 Nabeel worked at Goldman Sachs for four years in the Investment Strategy Group. Nabeel graduated from Warwick University in 2007 with a BSc in Mathematics, Operational Research, Statistics and Economics. He has been a CFA charterholder since 2011.
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