Hanson Sustainable Income Fund

Sustainable Investing

Sustainable Investing

February 21st 2021

The Hanson Sustainable Income Fund was founded by the Hanson family with the aim of providing capital growth across the cycle and regular dividends. The fund aims to pay a 4% annual yield, which has so far been achieved. This is achieved by investing in dividend paying companies which have embraced sustainability in the areas of Environment, Society & Governance (ESG).

The fund is a UCITS V fund and is available across bond, pension, and investment platforms.

The fund’s sustainable goal is to make ‘a net contribution to sustainability’ assessed by the investment manager, Arlington Capital’s, proprietary 24 test sustainable scoring system that all holdings are subject to and scored on an annual basis. The fund has been on a sustainable journey asking key questions such as:

What shade of green does not come out in the wash?

How do you assess and measure sustainability?

Can your assessment add positive value to the investment proposition?

We believe that the sustainability of a business concerns the degree to which it reduces negative impacts on the natural environment through its operations and how it adopts business practices that positively contribute towards sustainable development.

Taking these questions in turn, ‘greenwashing’ is where companies pay lip service to the regulations but in reality, little change is made to their operations. To address this the fund decided that to adopt a sustainable objective to ‘make a net contribution to sustainability’. To quantify and assess relative sustainability Arlington Capital adopted a sustainable scoring system that could make positive and negative assessments. The measuring system is holistic; with tests developed in the following areas: climate, resource efficiency, social, and governance as well as areas of excluded activities. Arlington believes that its 24-test system will enable it to look through greenwashing.

The third question is vital. Investors expect a return on their capital and sustainability must add value. There is much evidence to suggest that companies which have higher sustainable scores perform better than ones which do not. Arlington believes that sustainability helps them to identify risks which are vital in assessing the quality and resilience of a business model. They believe that companies which score positively have lower business risks and produce stronger returns. For the fund, that could mean they may have the ability to pay higher dividends.

A good example is Smurfit Kappa, Europe's leading packaging company. Smurfit is benefitting from the accelerating trends in e-commerce and increased demand for recyclable packaging. It has a net sustainability score of +19 / 24 and is raising its targets for energy efficiency and sustainable sourcing.

Looking at the markets for 2021 Arlington agrees with the UBS view that “from a regional perspective, we continue to see most potential upside in the UK”. They expect a near 40% rebound in earnings in 2021, driven by the global economic recovery. Arlington believes that international investors will rotate back into UK equities driven by cheap fundamentals, a positive outlook for Sterling, earnings growth and an attractive yield.

The Hanson Sustainable Income Fund holds companies that can grow their earnings in this environment such as AT&T, Smurfit Kappa and Unilever and will weather any storm well. Our exposure to an element of recovery will help our more cyclical stocks like the oil companies. We are beginning to look again at those recovery stocks that will be able to dramatically improve their dividends in 2021 as life returns to normal.

We believe that by embracing the sustainable agenda companies will build more resilient business models and make a vital contribution in the transition to a green economy. The fund invests in large companies which dominate their sectors and have market-leading brands. We believe that these firms will enjoy stronger, more resilient margins than their competitors and their share prices should outperform. We will use any short-term volatility as an opportunity to build up positions in our highest convictions. This later point is essential in order to preserve capital in volatile markets.

Disclaimer: this report does not constitute investment advice and is not a forecast. Past performance is no guide for the future.

Arlington Capital Limited · 6 Arlington Street · London SW1A 1RE

Telephone +44 20 39432640 · Facsimile +44 20 7493 1100

Registered in England and Wales · Company Number: 9578016

Authorised and Regulated by the Financial Conduct Authority FRN: 810629


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Hanson Sustainable Income Fund is a subfund of Ledbury SICAV which is authorised and regulated by the Malta Financial Services Authority.

© 2020 Hanson Sustainable Income Fund (UK) Limited. All Rights Reserved.

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Renumeration Policy

The members of identified staff who are fully or partly involved in the activities of the Fund that havea material impact on the risk profile of the Fund, such as Directors and Investment Committeemembers and the like are compensated through a fixed salary. Variable remuneration rules andpolicies are not applicable since the directors and investment committee members are exclusivelyremunerated through a fixed salary and the reimbursement of expenses incurred in the carrying outtheir duties. Disapplication has been deemed justifiable and proportionate on the basis of anassessment of size, internal organisation as well as the nature, scope and complexity of the activitiesit carries out. The Directors have resolved to disapply the Pay-Out Process principles as listed in itsstandard licence conditions and not to appoint a remuneration committee. Such derogation wasapproved by the MFSA for a period of two years ended 21 January 2022. 

Disclaimer

This website is published by Ledbury SICAV PLC (a Malta UCITS V) regulated by MFSA No CIS/424, in part it has relied on information provided by its Investment Manager, Arlington Capital Ltd in doing so, regulated by the FCA. The website is introduced by Haymarket Capital Ltd. This material is intended for distribution only to authorised professionals who offer independent advice on financial matters to their clients. It is for distribution only under such circumstances as may be permitted by applicable law.

It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. It is published solely for information purposes and is not to be construed as a solicitation or an offer to buy any assets, securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the investments, assets, securities, markets or development referred to in the materials.

The value of an investment and the income from it can go down as well as up, it may be affected by exchange rate variations, and you may not get back the amount invested. Past performance is not necessarily a guide to future performance.

The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and/or investment services referred to may not be suitable for all investors. If you are unsure of the suitability of any investment, you should contact a Financial Adviser for advice.

Disclaimer

This website is published by Ledbury SICAV PLC (a Malta UCITS V) regulated by MFSA No CIS/424, in part it has relied on information provided by its Investment Manager, Arlington Capital Ltd in doing so, regulated by the FCA. The website is introduced by Haymarket Capital Ltd. This material is intended for distribution only to authorised professionals who offer independent advice on financial matters to their clients. It is for distribution only under such circumstances as may be permitted by applicable law.

It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. It is published solely for information purposes and is not to be construed as a solicitation or an offer to buy any assets, securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the investments, assets, securities, markets or development referred to in the materials.

The value of an investment and the income from it can go down as well as up, it may be affected by exchange rate variations, and you may not get back the amount invested. Past performance is not necessarily a guide to future performance.

The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and/or investment services referred to may not be suitable for all investors. If you are unsure of the suitability of any investment, you should contact a Financial Adviser for advice.