[Fisher Investments (“FI”) generally evaluates and integrates Sustainability Risks and environmental, social and governance (“ESG”) factors at multiple stages throughout the investment process. “Sustainability Risk” is defined as an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Top-Down Investment Approach
Sustainability Risks and ESG factors are among the many drivers considered by FI’s Capital Markets Analysts and FI’s IPC when developing country, sector and thematic preferences. Environmental regulation, social policy, economic and market reforms, labor, and human rights are among ESG factors assessed when determining country and sector/industry allocations and shaping an initial prospect list of portfolio positions.
FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, determines the materiality of the ESG considerations based on the exposure among publically-traded companies in these categories. Higher materiality could imply larger ESG-related risks or opportunities, and may influence sector and country weight preferences as well as individual stock selection. The investment strategy and positioning reflects FI’s outlook over a 12-18 month horizon.
Bottom-Up Investment Process
FI’s Securities Analysts perform fundamental research on prospective investments to identify securities with strategic attributes consistent with the firm’s top-down views and competitive advantages relative to their defined peer group. The fundamental research process involves reviewing and evaluating a comprehensive set of qualitative and quantitative data, including ESG factors, prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labor rights controversies. FI would choose not to invest in companies when, in its opinion, security level issues: (i) violate a client mandated ESG policy or (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.