Fund Rationale: Thematics Safety Fund

Thematics Safety Fund (the “Fund”)
SGD Class R/A Accumulation Shares (ISIN: LU2125909916)
Fund Manager Page
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Endowus has selected the Fund because it benefits from:

  • Thematics AM’s specialisation in thematic investing and its portfolio managers’ prior experience in thematic investing with a strong track record;
  • Clear theme formulation on “Safety” based on understanding of the underlying secular growth themes;
  • A theme universe is defined yet broad enough to not sacrifice diversification;
  • A unique bottom-up, high-conviction investment process that is ESG integrated and targets sustainable investments, resulting in a portfolio that has low correlation to traditional growth strategies; and
  • Retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access.

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Key Information

Fund Objective: Aims to contribute to the protection of assets, data, goods and people’s health while generating long-term capital growth through an investment process that systematically includes Environment, Social, and Governance (“ESG”) considerations. 

Suitability: Investors who are looking for exposure to equity markets on a global basis, are interested in investing in a responsible thematic fund targeting sustainable investment objectives, are looking for a relatively concentrated portfolio, can afford to set aside capital for at least 5 years, can accept significant temporary losses, and tolerate volatility.

Cost: 
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  1. Total Fund-level Fees include fund management fee of 1.90%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus does not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 20 August 2020
Share Class Inception:  20 December 2018
Benchmark: MSCI World Index

Fund AUM: SGD 1.19bn
Source: MorningStar as of 24 June 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 May 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown. 

Selection Criteria

Thematics Asset Management (“Thematics AM”) is a dedicated equity manager in innovative thematic strategy. It was founded in 2019 by 6 partners, 5 of which are experienced portfolio managers who managed a range of successful thematic strategies in Pictet Asset Management. For example, Frederic Dupraz, the lead portfolio manager for Thematics Safety Fund, co-managed Pictet Security Fund for 10 years  and delivered a superior track record before he co-founded Thematics AM. 

Thematics AM’s overarching approach to theme definition is clear with a strong investment intuition - they start by understanding the primary forces behind different secular growth trends, and identify the most attractive opportunities where multiple forces converge and reinforce one another to give rise to a theme. The themes they identify 

  • Should provide opportunity to earn a sustainable long term premium over the market
  • Should offer a duration of at least 10 years, but typically a much longer lifespan, allowing for a stable, long-term strategy that outlives business cycles and their swings as well as short-term trendiness, 
  • Must be reasonably broad and deep to be investable and to create a diversified portfolio of high conviction stocks, and at the same time have a focused investment opportunity set.

In identifying the theme exposure of individual funds, they would assess materiality in terms of earning sensitivity as well as the leadership position the company has in that specific area. 

In terms of Safety theme, it covers both the digital world and real world. An further breakdown of the sub themes with examples is detailed below: 

Digital world 

  • Connect (safety chips, cybersecurity, cyberinsurance, data centres)
  • Shop (digital payments, payment processors, point-of-sale, credit cards)

Real World

  • Eat (clean processing & restaurants, testing)
  • Move (automotive safety, truck safety, train & metro)
  • Live (access control, guarding & cash transit, pest control)
  • Work (personal safety, industrial safety, hazardous waste) 

The investment universe is diverse enough with 250-300 names, and the theme  has longevity — it is a primary human need and a top priority for business and government leaders.

The investment team adopts a bottom up and high conviction investment process that is ESG integrated. They  assess management capability, execution risk, the company’s competitive position, trading risks and a range of additional financial, non-financial and ESG considerations to value the business and set a risk-adjusted target price. The Fund is classified as Article 9 under EU Sustainable Finance Disclosure Requirement, which means it targets sustainable investments. The main Sustainable Development Goals ("SDG") that the Fund contributes to are SDG 13 (mitigating climate change), SDG 7 (contributing to sustainable energy use), SDG 16 (safeguarding peace) and SDG 3 (good health and well-being). 

The Fund would have a bias to growth style and to mid and small cap, but due to its differentiated approach, it has a low correlation to traditional growth strategies. Investors should be aware that thematic strategies can be narrower in scope than traditional funds that are  exposed to the broader market. Hence, a thematic fund will be more suited as a satellite strategy than a core part of an investor’s portfolio.  

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Updated by Endowus: July 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
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