Stockholm (NordSIP) – Following up on the collaboration announcement between Aktieinvest and Arabesque, we spoke to Aktieinvest CEO Therese Lundsedt to find out more. She explained her strategy to promote stock market investments to her retail clients, and how she uses Arabesque’s screening tool in a simple yet most effective way.
One of Aktieinvest’s concept is to propose simple and approachable investing tools for its clients, which are mostly retail investors wanting to build a portfolio over time. Lundstedt, who has taken over as CEO in February 2015, has turned around a traditional savings platform, by updating the offering to integrate products that are easy to understand for beginners in the stock market. One of those concepts is the “Savingsbox” (Sparbox, in Swedish): a short-list of stocks or funds that correspond to a given set of criteria, which a client add money to on a monthly basis. What makes this solution possible is the fact that Aktieinvest offers the possibility to invest in fractions of stocks or fund units, while keeping the remainder on its own balancesheet. This feature also allows the platform to reinvest dividends automatically into the box.
Driven by the integration of Arabesque’s S-Ray tool onto its platform, Aktieinvest now offers a sustainable box which contains the 6 companies which rank the highest in their respective regions: 2 in Sweden, 2 in the rest of Europe and 2 in North America. The system also applies a blanket exclusion for companies involved in weapons, defense, nuclear power, fossil fuel, tobacco, gaming and alcohol. “One of the things I was really happy about,” says Lundstedt, “is that this simple screening gave us a very good diversification between different sectors.”
Indeed, one might have thought that sustainable companies would be concentrated in some niche industries, but in fact, the six companies have very little to do with each other. Market capitalisations span from the lower end of the mid-cap segment (€2 billion) well into large-cap territory (€34 billion).
Husqvarna is a manufacturer of outdoor power equipment used for the maintenance of forests, parks and gardens. The product range includes chainsaws, trimmers and lawn mowers. The Group is also active in garden irrigation and in cutting equipment and diamond tools for the building and stone industry. Husqvarna’s market cap is just north of €5 billion.
Assa Abloy (Sweden)
Assa Abloy is a global supplier of locks and door solutions. The product range includes mechanical lock systems, entrance automation, electromechanical and electronic locks, as well as security doors and fittings. Europe is the company’s largest market closely followed by North America. Approximately three quarters of sales come from the institutional and commercial market. In 1994, Assa merged with Finnish company Abloy and since then invests heavily in sustainability. The company has a market capitalisation of approximately €20 billion.
Bakkafrost (Faroe Islands)
Founded in 1968, Bakkafrost is one of the world’s largest salmon producers today. Given the potentially damaging effects of salmon farming on the environment, the company has set a high priority on sustainability and complies with the highest standards for meeting its targets. Company sales have continued to grow despite falling salmon prices during the latter part of 2017. The stock trades on the Oslo stock exchange. Bakkafrost has a market capitalisation of just above €2 billion.
BE Semiconductor Industries (the Netherlands)
BE Semiconductor Industries is active in the global semiconductor and electronics sector. Some of the company’s largest customers are Samsung, Toshiba and Bosch. The company’s products are typically components of computers, cars, mobile phones etc. The company’s focus on sustainability has not been at the stock price development, as illustrated by its phenomenal performance, up 1300 percent over the past 5 years. While the company has grown sharply, both through acquisitions and organic growth, it stays in the mid-cap segment with a market capitalisation of about €3 billion.
Telus Corporation (Canada)
Telus is a telecom company offering services such as internet, video and tv access. This is the stock with the highest dividend yield in the basket, with a quarterly dividend payment that adds to 5 percent annually. The market cap is approximately €16 billion.
Praxair is a global industrial gas company. Its operations consist of two product lines: industrial gases and surface technologies. Its industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases). It also designs, engineers and builds equipment that produces industrial gases primarily for internal use. The company was founded in 1907 by Carl Von Linde, who also lent his name to the homonymous German group. After several years of mutual courting, Praxair and Linde have decided to merge, and the process is currently being reviewed by the European competition authorities. Meanwhile, the US group’s market cap is currently around €34 billion.
It will be interesting to observe the performance of this selection over time. Clearly both the screening method and other criteria, such as the exclusions that were applied, have a very strong impact on the end-result, given the concentration of the basket. “One of the interesting things,” comments Lundstedt, “is that both Atlas Copco and Sandvik, which came on top of the Swedish list according to the Global-Compact and the ESG screens, were excluded because of their link to nuclear energy.” This is indeed a good example of the practical issues managers of SRI products encounter on a daily basis.
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