Islamic Global Responsible Equity Fund
General Information
The Islamic Global Responsible Equity Fund (“Fund”) is part of Principal Islamic Asset Management (Ireland) Plc’s range of Dublin-based Undertakings for Collective Investment in Transferable Securities (“UCITS”) which complies with the strict European regulatory standards that emphasize strong investor protection and robust risk management framework. All investments made by the Fund will be in compliance with the Fund’s Shariah Investment Guidelines. As Principal Group’s first Shariah-compliant ESG fund, the Fund is also classified as an Article 8 fund under the European Union’s Sustainable Finance Disclosure Regulations. The Fund has a specific focus on promoting environmental and social characteristics, particularly on carbon risk reduction and exclusion of companies or issuers from consideration for investment where their revenue is significantly derived from involvement in producing tobacco or the gambling sector. Such social exclusion criteria are also in line with Shariah principles. The Fund seeks to provide a return through capital growth over the medium to long term by investing in a globally diversified portfolio of Shariah-compliant equities that demonstrate positive fundamental change at attractive relative valuations.
Fund Details
| Investment Manager | ||||||||
Principal Islamic Asset Management Sdn Bhd Mohd Fadzil Mohamed BSc (Hons), University of Aberystwyth | ||||||||
| Sub-Investment Adviser | Principal Asset Management (S) Pte Ltd Christopher Leow Eu Jin*, CFA BCom (Hons), University of Western Australia | |||||||
| Launch Date | 8-Apr-2022 | |||||||
| Fund Domicile | Ireland | |||||||
| UCITS Qualifying | Yes | |||||||
| Fund Index | MSCI ACWI Islamic Index | |||||||
| Base Currency | USD | |||||||
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| Pricing | Daily | |||||||
| Dealing | 10am Dublin / 5pm Hong Kong | |||||||
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*Christopher Leow Eu Jun is the Chief Executive Officer and Chief Investment Officer of Principal Asset Management (S) Pte Ltd, and provides investment management services to the Investment Manager, which the Fund Managers may consider in making their investment decisions.
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Fund Codes
| Fund/Class | ISE Sedol | ISIN |
|---|---|---|
| USD I Class Accumation Shares | BL6J3H5 | IE000I1F0636 |
Fund Fees
| Fund Details | A-Class | B-Class | R-Class | I-Class |
|---|---|---|---|---|
| Management Fees | 1.50% | 1.50% | ||
| 0.80% | 0.80% |
Article 8 Fund under Sustainable Finance Disclosure Regulations
The Fund is classified as an ESG Orientated fund under the Sustainable Finance Disclosure Regulations (“SFDR”). The environmental characteristic considered by the Fund include but are not limited to carbon footprint. The social characteristics considered by the Fund include but are not limited to health and wellbeing.
How the Environmental and Social Characteristics Promoted by the Fund are met
In order to meet the environmental and social characteristics promoted, the Investment Manager combines an assessment of ESG risks with screening and exclusion criteria.
In order to consider ESG risk, the Investment Manager assigns an ESG risk level to each holding considered within the Fund. To assign the ESG risk levels, the Investment Manager evaluates an investee company’s relationships with each of its stakeholders; shareholders, customers, employees, suppliers and their supply chains, their communities and the environment. The Investment Manager will use internal data, incorporating partnership with third party data providers (MSCI, ISS and Bloomberg etc.) to help provide consistent data across the investment universe when making these evaluations. The Investment Manager will also assign an ESG risk trend of either improving, stable or deteriorating using the above processes.
The Investment Manager subsequently uses these ESG risk levels to identify the key risks to the stakeholders and the associated positive change to the environmental characteristics to be considered in each holding and references these outcomes in investment decision making. Stocks of Shariah-compliant companies which demonstrate poor or deteriorating ESG scores or those with outstanding ESG issues deemed to have potential material financial impact would either be removed or significantly downsized, and the Investment Manager seeks to engage with companies that are non-performing from an ESG standpoint, with the aim of improving their ESG performance.
The Investment Manager also applies screening to specifically consider carbon footprint. The Investment Manager uses MSCI to identify the carbon risk score for investee companies and aims for an aggregate carbon risk level for the Fund that is 15% lower than the Index.
A further set of fixed social exclusion criteria is in place to exclude companies or issuers from consideration for investment where their revenue is significantly derived from involvement in producing tobacco or involvement in the gambling sector, as defined by the GICS Industry Sector classification.
Good Governance Practices of Investee Companies
The Investment Manager identifies governance considerations as integral to the investment philosophy and process. Improving governance policies and practices are identified as providing a basis for an improved relative valuation, while governance dilution or deterioration represent an inherent source of risk and downward valuation. In order to ensure good governance, the Investment Manager engages with senior executives from investee companies within the Fund.
The Investment Manager also applies screening to consider accounting flags, intended to measure the percentage of a portfolio’s Net Asset Value exposed to companies ranking below average relative to global peers on MSCI’s assessment of accounting aggressiveness, and aims for an aggregate accounting flag weight lower than that of the Index.
The Investment Manager is a signatory to the UN Principles for Responsible Investment (the “UNPRI”) as part of the Principal Global Investors Group. As a signatory to the UNPRI, the good governance practices of investee companies are assessed prior to making an investment and periodically thereafter. UNPRI responsible investing reporting can be found at https://www.principalglobal.com/eu/about-us/responsible-investing.
