Thematic Investing: Innovative strategies offered in SMAs

---

The investment objective of the separate account strategy is to achieve total return through investments in U.S. and non-U.S. equity securities issued by infrastructure companies. Infrastructure companies typically provide the physical framework that society requires to function on a daily basis and are defined as utilities, pipelines, toll roads, airports, railroads, marine ports and telecommunications companies. (According to "The Handbook of Infrastructure Investing.”) The highly experienced portfolio team applies a disciplined, bottom-up investment process, utilizing both qualitative and quantitative factors, focusing on high-quality commercial infrastructure owner/operators.

The world will have to invest $90 trillion in sustainable infrastructure by 2030, according to estimates by The New Climate Economy. These investments are crucial not only to renew old equipment in developed countries and bring them in sync with the fight against climate change, but also to bolster green economic growth in emerging markets and developing countries. 

In 2022, spending on digital transformation is projected to reach $1.8 trillion* to accommodate the growth of current and new technologies.   By 2025, global digital transformation spending is forecast to reach $2.8 trillion*, a 300% increase from 2017. (*Source: Statistica February 2022) 

The 2015 Paris Agreement set in motion a treaty on climate change with a goal to limit global warming by reducing greenhouse gas emissions that are produced by the burning of fossil fuels.  In 2020, fossil fuels generated more than 80% of global energy consumption. Renewables, nuclear and hydro are projected to become the largest energy generators between 2030 and 2040.   $22.5 trillion must be invested in renewable infrastructure by 2050.

The investment objective seeks capital growth by investing in businesses related to food production that capture value at various points along the food chain. Put simply, agribusiness is the business of feeding the world. It includes the entire spectrum of businesses related to food production – from planting to the distribution and sale of the end product. Not only does this offer promising investment opportunities, our global scope and the wide array of sectors could potentially reduce investors risk from market fluctuations. So, when you invest in our discipline, you may benefit from the growth prospects of the agribusiness. The highly experienced portfolio team applies a disciplined, bottom-up investment process, utilizing both qualitative and quantitative factors, focusing on high-quality commercial Agribusiness owner/operators.

Our strategy seeks to invest in companies advancing innovation and the use of technology in the agriculture and food industries. This includes companies involved in the provision of agricultural technologies (“AgTech”) related to precision agriculture, agricultural robots and automation, controlled environment agriculture (e.g., vertical farming, hydroponics), and agricultural biotechnology, as well as those involved in food innovation activities related to protein/dairy alternatives and food waste reduction.

The AgTech and Food Innovation theme could potentially benefit from helping address global food insecurity and minimizing the adverse environmental impacts of large-scale agriculture.

Production and consumption dynamics around food are evolving. Our strategy seeks to gain exposure to the forefront of these dynamics by investing in AgTech and Food Innovation companies, regardless of sector or geography.

The investment objective seeks capital growth by investing at least two-thirds of its total assets in a diversified portfolio of the shares of companies operating in the financing, plantation and management of forests and wooded regions and/or the processing, production and distribution of timber and other services and products derived from wood. The investment universe is not restricted to a specific geographical zone. The highly experienced portfolio team applies a disciplined, bottom-up investment process, utilizing both qualitative and quantitative factors, focusing on high-quality Timber & Forestry owner/operators.

We cannot survive on this planet without forests. In a sense, they breathe for the Earth, absorbing carbon dioxide from our atmosphere, and producing the oxygen we require in return. And by storing that carbon, forests help to regulate the global climate, absorbing nearly 40 percent of the fossil-fuel emissions we humans produce.

Forests also provide fuel for cooking and warmth, medicinal plants, food, wildlife habitat, clean water, spiritual and cultural touchstones, and for many, the means to earn a living. Approximately 70 percent of terrestrial animals and plants make their homes in forests, while more than 25 percent of the world’s people—nearly 1.6 billion—rely on forest resources for their livelihoods, with 1.2 billion of them using trees to generate food and cash. The economic value of these ecosystem services has been estimated at $33 trillion per year, twice the GDP of the United States.

The investment objective of the strategy is to achieve total return through investment in U.S. real estate equity securities.  In the US, real estate investment trusts, or REITs, own a significant share of the building stock. Listed REITs are publicly owned, thus allowing investors to potentially influence management towards integrating more sustainability-focused policies and practices. Many REITs focus on sustainability as a profit driver by 1) reducing costs through energy efficiency upgrades and retrofits, and 2) increasing rents and values, through healthier buildings and sustainable certifications.  

The highly experienced portfolio team applies a disciplined, bottom-up investment process, utilizing both qualitative and quantitative factors, focusing on high-quality commercial real estate owner/operators.

Buildings are large consumers of energy and producers of emissions. There is great potential to improve the performance of buildings in terms of sustainability issues. Buildings present a real opportunity for GHG reduction in cradle-to-cradle design for business supply chains, property investments and resource use priorities. Additionally, addressing sustainability issues could affect the market values of a property or portfolio, providing a price premium, a lower default risk, lower volatility and slower rate of depreciation. 

Emphasizes a total return approach to generate an attractive level of tax-exempt
income while seeking to protect shareholder capital.  Our team considers both yield and price appreciation as critical sources of return. Emphasizes credit and structural strategies that have price upside. Strives to avoid bonds whose yields are insufficient for their risks.

The strategy employs active management, bottom-up research and proactive portfolio positioning. Guided by proprietary ESG research, the strategy selectively invests in municipal issuers with above average and/or improving ESG profiles. This strategy allows clients to bias towards over 30 states for investors with state-tax liabilities. 

As an innovator in the Multi-Asset Real Return category, Capital Innovations delivered one of the first strategies designed to protect investor's purchasing power by investing in a variety of global Real Asset classes. We pursue real return opportunistically through a flexible, active approach that allows us to choose what we believe are the most appropriate Real Assets based on the current market environment. Our team utilizes an allocation process that includes a long-term outlook focusing on valuation to identify undervalue asset classes. However, we also consider short-term drivers of return including changing economic conditions and rapid swings in investor behavior. Our Multi-Asset Real Return Strategy is designed to be a core, "one-stop shop", solution combining both income and growth characteristics. Our team's Real Asset focused process seeks out the liquidity of exchange traded opportunities around the world and across asset classes along with dividend income opportunities.