SOLUTIONS > GROWTH STRATEGIES

Global Value ESG Model

Utilizing our proprietary quantitative ESG methodology, companies are ranked on their commitment to environmental & social change, governance policies, culture, profitability, and shareholder alignment. Portfolios are comprised of securities selected based on our fundamental research and/or quantitative approach.

 


Key Features

UTILIZES OUR PROPRIETARY ESG APPROACH

Our proprietary quantitative ESG system ranks companies on their commitment to environmental & social change, governance policies, culture, profitability, and shareholder alignment. Learn more.

VALUE APPROACH

Our most important pillar is our value investment philosophy.

Global

Our “go anywhere” approach provides more opportunities.

Strategy Overview

The Global Value ESG Model is generally for clients whose principal objective is long-term capital appreciation.

The Model utilizes our proprietary quantitative ESG methodology to rank global large cap equities. Portfolios are comprised of securities selected based on our fundamental research and/or quantitative approach. Our proprietary TRACTM system is used in an effort to optimize buy and sell decisions for targets and portfolio holdings.

Key Details

InceptionMarch 31, 2021
Investment universeGlobal large cap
StyleValue
ESG ApproachGeneration PMCA ESG Methodology

How we find great companies doing great things


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GOVERNANCE SCORE

Review of board diversity, board tenure, and number of independent directors

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ENVIRONMENT & SOCIAL IMPACT SCORE

Analysis of environmental and social impact achievements, including weightings in leading ESG ETFs, UN Sustainability rankings, and environmental and social impact awards

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CULTURE SCORE

Analysis of remuneration policies, management salaries, and employment opportunities

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VIRTUOUS CYCLE SCORETM

High profitability and return on invested capital to fuel social and environmental investments

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SHAREHOLDER ALIGNMENT SCORE

Emphasis on management teams that are aligned with shareholders, have ownership of shares, and exhibit prudent capital allocation

Investment Process

1. SECTOR EXCLUSIONS & ESG RANKING

SECTORS EXCLUDED FROM UNIVERSE:

  • ENERGY MINERALS
  • CHEMICALS
  • TOBACCO
  • NON-ENERGY MINERALS
  • FIREARMS
  • UTILITIES

Our Commitment to Sustainable Investing

ESG RANKING METHODOLOGY:

ENVIRONMENTAL/SOCIAL SCORE

25%

ENVIRONMENTAL/SOCIAL SCORE
SHAREHOLDER ALIGNMENT SCORE

20%

SHAREHOLDER ALIGNMENT SCORE
GOVERNANCE SCORE

20%

GOVERNANCE SCORE
VIRTUOUS CYCLE SCORE

20%

VIRTUOUS CYCLE SCORE
CULTURE SCORE

15%

CULTURE SCORE

2. STOCK SELECTION: A HYBRID APPROACH

FUNDAMENTAL PICKS: STOCK IDEAS FROM OUR INVESTMENT TEAM

Generation employs fundamental research and subscribes to a value investment philosophy. We analyze a company’s operations, finances, and valuation to assess its risk and reward potential.

We believe a value strategy offers two advantages:

  • A stock purchased below our estimate of its intrinsic or fair market value offers the potential for outperformance as the stock ascends to fair value.
  • Stocks trading below their fair value offer a “margin of safety”; that is, downside risk is mitigated because these stocks are detached from their fair value.

WHAT DO WE LOOK FOR?

+ Good business franchise
+ Strong balance sheets
+ High return on capital
+ Proven management team
+ Competitive advantages

QUANTITATIVE PICKS: TOP-RANKED STOCKS ACCORDING TO OUR PROPRIETARY RANKING METHODOLOGY

Our Global ESG Value strategy utilizes our proprietary ranking methodology that ranks companies on combined valuation, business quality, financial strength, and momentum metrics.

VALUATION

Stocks are ranked on valuation ratios such as P/E, EV/EBITDA, P/CF, and our own proprietary valuation ratios.

QUALITY

Stocks ranked on performance metrics such as return on equity, return on invested capital, etc.

FINANCIAL STRENGTH

Stocks ranked on debt-to-equity, interest coverage, Piotroski F Score, etc.

MOMENTUM

Stocks ranked on relative performance over the last 12 months.

3. PORTFOLIO CONSTRUCTION

FUNDAMENTAL PICKS

Fundamental ideas that rank in top-half of ESG rankings become candidates for inclusion.

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QUANTITATIVE PICKS

Quantitative picks are added after portfolio populated with fundamental picks.

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PORTFOLIO

Portfolio is comprised of fundamental and quantitative picks.

4. PORTFOLIO MANAGEMENT

CONTINUOUS MONITORING

Positions are eliminated when their ESG ranking falls to the bottom half of the universe or they adopt business lines (e.g., firearms) that would place them in excluded sectors.

PORTFOLIO OPTIMIZATION

Stocks are sold as they approach their estimated fair values, when our outlook has changed, or when sell signals are triggered in our proprietary trading systems. Our proprietary trading systems help optimize the timing of our buys and sells.

Learn more about our Global Value ESG Model

Global Value ESG Model

Utilizing our proprietary quantitative ESG methodology, companies are ranked on their commitment to environmental & social change, governance policies, culture, profitability, and shareholder alignment. Portfolios are comprised of securities selected based on our fundamental research and/or quantitative approach.

ESG_Model_Background

Overview

How we find great companies doing great things


GenerationIcons-03

GOVERNANCE SCORE

Review of board diversity, board tenure, and number of independent directors

GenerationIcons-01

ENVIRONMENT & SOCIAL IMPACT SCORE

Analysis of environmental and social impact achievements, including weightings in leading ESG ETFs, UN Sustainability rankings, and environmental and social impact awards

GenerationIcons-02

CULTURE SCORE

Analysis of remuneration policies, management salaries, and employment opportunities

GenerationIcons-04

VIRTUOUS CYCLE SCORETM

High profitability and return on invested capital to fuel social and environmental investments

GenerationIcons-05

SHAREHOLDER ALIGNMENT SCORE

Emphasis on management teams that are aligned with shareholders, have ownership of shares, and exhibit prudent capital allocation

Investment Process

Learn more about our Global Value ESG Model