sustainable investment mandate Discretionary portfolio management

Transcription

1 sustainable investment mandate Discretionary portfolio management

2 the sustainable investment mandate: investing in companies that take their social role seriously investing is more challenging and time-consuming than ever If you are not willing, able or permitted to manage your own assets, but still want to be absolutely sure your assets are in good hands, then Discretionary Portfolio Management is the solution for you. Simply leave the management of your assets to the professionals at ABN AMRO. One of our Discretionary Portfolio Management services is the Sustainable Investment Mandate. ABN AMRO offers this service in conjunction with Triodos MeesPierson, with an excellent track record in sustainable investing, that supports the equity selection process for the Sustainable Investment Mandate. making investing profitable and sustainable Companies must take responsibility for the environment and society both in times of turbulence and stability. Most western countries as well as others, such as Japan, are steadily stepping up efforts to mitigate their economy s negative impact on the environment and society. That is essential for our generation, and vital for future generations, as well as our own. Sustainable investment is all about finding the optimal balance between People (social aspects), Planet (environmental aspects) and Profit (continuity through profitability). Companies that are serious about sustainability adhere to more stringent standards than is legally required when it comes to community, environment and corporate governance while simultaneously offering prospects of solid financial results. This is the core of corporate social responsibility. The Sustainable Investment Mandate plays a role in this process by investing on your behalf in companies at the forefront of this area. strong financial results Companies that spare or in fact protect the environment, nurture good relations with their employees and communities, and have a robust corporate governance policy are a sound investment in many respects, particularly in the long term. Numerous studies confirm a link between excellence in sustainability and good (above-average) financial results.

3 partnership between ABN AMRO and Triodos MeesPierson For the selection of sustainable equity investments we use the expertise of Triodos MeesPierson (TMP). The TMP specialists have many years experience managing the sustainable equity, bond and alternative investment portfolios of high net worth customers of Triodos Bank and MeesPierson. TMP selects equities that combine the highest sustainability ratings with good financial prospects. ABN AMRO selects the bonds and liquidities and is responsible for the asset allocation. The ABN AMRO specialists retain overall responsibility, execute the transactions and manage the mandate. TMP s portfolio managers handle the equity selection, using sustainability information from the research organisation Sustainalytics, a joint venture of MeesPierson, PGGM and Triodos Bank. Sustainalytics analyses the sustainability of more than 3000 companies, each of which is rigorously assessed on ten economic, social and governance criteria. The resulting score provides a sound basis for responsible choices. The equity selection leads to a globally diversified portfolio. The portfolio s currency risks can be wholly or partly hedged, depending on ABN AMRO s currency outlook. market leader in responsible operations and sustainable investment The Sustainable Investment Mandate reflects ABN AMRO s commitment to making sustainability an integral part of its operations - and TMP is a logical partner for pursuing this sustainability ambition. composition of sustainable portfolio The equities portfolio of your Sustainable Investment Mandate consists of individual sustainable companies. The remainder of the assets are predominantly invested in individual western European government bonds. The portfolio may also include investment funds and structured products, such as certificates, whose underlying investments satisfy equally strict environmental, social and governance criteria.

4 equities for wealth growth The selection of equities on financial merits is based on a clearly defined framework. Prior to selection, companies undergo a detailed qualitative and quantitative analysis by TMP, focusing on valuation (is the price right?) and financial health (balance sheet ratios and performance). TMP carries out its own supplementary research to make sure all the facts and figures are correct. The final step in the investment process consists of technical analysis to ensure the transaction timing is just right. This selection framework enables TMP to scour the global equity markets for attractive investment opportunities, while also ensuring a consistent and disciplined approach to the purchase and sale of equities in the portfolio. sustainable companies selection process The ABN AMRO investment policy serves as the starting point for the allocation across the various asset classes. TMP manages the equity component, picking companies that combine excellent sustainability credentials with good financial prospects. Their analysts assess the sustainability of companies from both a product-related and a process-related perspective. product-related criteria Companies business operations are assessed, by means of product-related criteria. Companies are excluded from the Sustainable Investment Mandate if they generate more than a certain percentage of their revenue from the production of nuclear energy, weapons, tobacco, fur and/or gambling. Producers of alcohol and companies involved in the adult entertainment industry are only admitted if they meet strict conditions. process-related criteria Companies products or services are assessed, by means of process-related criteria. This comprises both the internal production process and all relevant relations between the company and its ecological and social environment. TMP scrutinises such themes as products, employees, society, customers and competitors, suppliers, business ethics and controversial corporate activities (including animal testing, genetic modification and factory farming). After considering all these criteria (about one hundred in total), TMP decides whether or not a company is eligible for inclusion in the equity component of the Sustainable Investment Mandate. a portfolio that suits you The Sustainable Investment Mandate allows you to instruct the asset managers of ABN AMRO to manage your assets in line with agreed principles and aims. The composition of your portfolio is tailored to your personal circumstances and objectives, with a specific focus on such questions as: what are your financial aims, what are your available financial reserves and what is your attitude towards risk and what is your investment experience? The answers to these questions determine your risk profile, which is the key guideline in compiling your investment portfolio. The table indicates which risk profile suits a specific portfolio return target, investment horizon and risk appetite. It also shows the bandwidth for investing in variable income securities for each risk profile.

5 Defensive Risk profile conservative balanced bonds balanced equities Aggressive growth equities Return target 5% 6% 7% 8% 9% Investment horizon 4 years 6 years 8 years 10 years 12 years Risk appetite low average average high high Variable income bandwidth* 10-40% 25-55% 35-75% 50-90% % * Variable income: all securities that cannot be classified as liquidities or fixed income securities, such as equities, hedge funds, indirect property, options and futures. aggressive or defensive The rule with investing is: the more risk, the greater the expected return. A large percentage of equities in the portfolio raises the expected return as well as the risk of sharp price fluctuations. We call this an aggressive portfolio. Aggressive portfolios can show sharp upward and downward price fluctuations in the short term. If you prefer to avoid such severe fluctuations, a defensive portfolio is more suitable for you. In this case, a larger component will be invested in bonds and liquidities. This usually offers more certainty, but the expected long-term return is lower. costs Asset management via the Sustainable Investment Mandate means you can choose between paying an annual fee with a variable cost component or an all-in fee. In addition, the investment funds charge management fees. These are deducted from your returns on the investments. Finally, dividend tax is withheld where applicable. You can terminate your mandate free of charge at any time. annual management fee with a variable cost component Each year we charge a fee of EUR 3,000 plus 0,30% (excl. VAT) over the value of the invested assets. This fee is calculated based on the volume at the end of each quarter and is charged quarterly. Alongside this annual management fee, the normal costs for investment services are charged, including transaction charges and custody fees. This cost structure is applicable to portfolios from EUR 1,000,000.

6 all-in fee An alternative option is to pay an all-in fee over the value of the managed assets, with a minimum amount that depends on the profile you select: All-in fee per year (excl. VAT) over the managed assets Conservative 1,00% (min, EUR 5,000) Balanced bonds 1,25% (min, EUR 6,250) Balanced equities 1,25% (min, EUR 6,250) Growth 1,50% (min, EUR 7,500) Equities 1,50% (min, EUR 7,500) The fee is calculated based on the volume at the end of each quarter and is charged quarterly. ABN AMRO assesses no additional charges, so you pay no transaction costs, custody fee or dividend or redemption costs. Forty percent of the all-in fee is subject to VAT; 60% is VAT-exempt. This cost structure is applicable to portfolios from EUR 500,000. discretionary portfolio management The Sustainable Investment Mandate is one of the Discretionary Portfolio Management services offered by ABN AMRO. Other options you can choose from are: the Classic Mandate, with an emphasis on investments in individual equities and/or bonds; the Multi Manager Mandate, with investments in the most appreciated investment funds of leading fund houses, giving you direct access to the expertise of external asset managers; the Dynamic Asset Allocation Mandate, allowing you to optimally benefit from the market vision of ABN AMRO via flexible and dynamic diversification across the various investment categories; the Customised Mandate, offering customised solutions for your specific investment wishes.

7 risks The Sustainable Investment Mandate invests mainly in individual equities and bonds, but also allows you to benefit from extra market opportunities via investment funds, liquidities and structured products. Participants in the Sustainable Investment Mandate run the risks normally associated with a broadly diversified investment portfolio compiled according to the vision of ABN AMRO. Equities typically involve exposure to a price risk. Bonds are subject to a debtor risk as well as an interest rate risk. Both these factors affect the price of bonds. Investment funds run the same risk as the individual securities included in the fund. Certain funds involve an alternative risk: guaranteed funds carry a smaller risk, while funds that invest in derivatives or credits entail an increased risk. As regards liquidities, fund participants run a debtor risk associated with the bank where the cash is deposited, while structured products involve a debtor risk on the issuing institution as well as the risk arising from the specific structure and movement of the underlying values. The value of your investment can rise or fall. Past performance is no guarantee of future results. your benefits sustainable investments The Sustainable Investment Mandate means you invest exclusively in companies with a good track record in terms of the environment, society and corporate governance. convenience Discretionary Portfolio Management takes the responsibility for your assets out of your hands. We naturally have regular contact with you to discuss the progress and performance of your investments. In addition, you receive a written report each quarter on your portfolio performance and composition. professional The asset managers of ABN AMRO and Triodos MeesPierson rank among the best in their field. Drawing on their up-to-date knowledge and expertise, they deliver an excellent service based on a systematic and structured approach. interested? Would you like to know more about the Sustainable Investment Mandate or any of ABN AMRO s other Discretionary Portfolio Management services? Your private banker would be happy to inform you further. You can also visit our internet site:

8 General Disclaimer The information provided in this document has been drafted by ABN AMRO Bank N.V. and is intended as general information and is not oriented to your personal situation. The information may therefore not expressly be regarded as a recommendation or as a proposal or offer to 1) buy or trade financial instruments and/or 2) procure investment services nor as investment advice. Decisions made on the basis of the information in this document are your own responsibility and at your own risk. The information on and conditions applicable to ABN AMRO-offered financial instruments and ABN AMRO investment services can be found in the ABN AMRO Investment Services Condition (Voorwaarden Effectendienstverlening ABN AMRO) and the Information Sheet Investment Services ABN AMRO (Informatieblad Effectendienstverlening), which are available on Although ABN AMRO attempts to provide accurate, complete and up-to-date information, which has been obtained from sources that are considered reliable, ABN AMRO makes no representations or warranties, express or implied, as to whether the information provided is accurate, complete or up-to-date. ABN AMRO assumes no liability for printing and typographical errors. The information included in this document may be amended without prior notice. ABN AMRO is not obliged to update or amend the information included herein. Neither ABN AMRO nor any of its agents or subcontractors shall be liable for any damages (including lost profits) arising in any way from the information provided in this document or for the use thereof. ABN AMRO, or the relevant owner, retains all rights (including copyright, trademarks, patents and any other intellectual property right) in relation to all the information provided in this document (including all texts, graphic material and logos). The information in this document may not be copied or in published, distributed or reproduced in any form without the prior written consent of ABN AMRO or the appropriate consent of the owner. The information in this document may be printed for your personal use. US Securities Law Disclaimer ABN AMRO Bank N.V. ( ABN AMRO ) is not a registered broker-dealer under the U.S. Securities Exchange Act of 1934, as amended (the 1934 Act ) and under applicable state laws in the United States. In addition, ABN AMRO is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the Advisers Act and together with the 1934 Act, the Acts ), and under applicable state laws in the United States. Accordingly, absent specific exemption under the Acts, any brokerage and investment advisory services provided by ABN AMRO, including (without limitation) the products and services described herein are not intended for U.S. persons. Neither this document, nor any copy thereof may be sent to or taken into the United States or distributed in the United States or to a US person. Without limiting the generality of the foregoing, the offering, sale and/or distribution of the products or services described herein is not intended in any jurisdiction to any person to whom it is unlawful to make such an offer, sale and/or distribution. Persons into whose possession this document or any copy thereof may come, must inform themselves about, and observe, any legal restrictions on the distribution of this document and the offering, sale and/or distribution of the products and services described herein. ABN AMRO can not be held responsible for any damages or losses that occur from transactions and/or services in defiance with the restrictions aforementioned. ABN AMRO is registered in the Trade Register of the Amsterdam Chamber of Commerce, no , with VAT identification number: NL B01. AA2238 May 2010