CRUX Asset Management (“CRUX”) has a recognisable and well-established investment approach, which provides the foundation of our organisation and remains the fundamental reason why investors trust us with their assets. At the heart of our approach, CRUX seeks to deliver long-term capital growth through actively managed long-only equity portfolios. Our primary focus has always been ensuring that our fund managers are the best possible stewards of our clients’ assets, selecting each investment on their ability to create long-term sustainable returns.
Responsible investment, as with all other components of the investment process, is the responsibility of our investment team. This policy applies to all assets under management and can be viewed in conjunction with CRUX’s Stewardship Code, ESG Policy, Voting Policy and Conflicts of Interest Policy, which guide our fiduciary responsibilities as an organisation.
We define responsible investment as the practice to incorporate Environmental, Social and Governance (“ESG”) factors in investment decisions and active ownership. We therefore think of responsible investment as the third dimension – after risk and return – that we consider when analysing an investment. As long-term stewards of our clients’ capital, CRUX is committed to assessing the lasting profitability of the companies in which we invest. We believe our responsibilities include protecting the interests of our clients from the impacts of financial and non-financial risks.
For CRUX, it means a commitment to:
- Integrating analysis of relevant ESG issues into investment processes where appropriate
- Active ownership of our investee companies in order to manage risk and enhance long-term sustainable returns
- Taking a transparent approach to our responsible investment activities, both to clients and the wider public
By taking an active approach towards ESG issues, we aim to further protect our clients’ interests and make a positive impact to society at large. We describe our investment methodology as an ESG-integrated approach rather than negative screening approach. We are aware of environment and broader sustainability considerations, but do not place formal restrictions on our funds’ investment universe.
Active ownership through engagement and proxy voting underpins the core of our approach to responsible investment. Active ownership activities are aimed at promoting sustainable profitability and risk management in portfolio companies, in order to protect shareholder value and enhance long-term returns.
Our primary purpose in engagement is to support long-term returns and to mitigate risk. By engaging with investee companies, we try to encourage them to develop ESG risk management and more sustainable business practices, which should in turn contribute to a more resilient and sustainable global economy. Well-managed companies that look to the future are better positioned to navigate the risks and challenges inherent in business and achieve long-term value creation.
The majority of CRUX fund managers maintain close contact with the companies in which we invest, meeting the management of current and prospective investee entities on a regular basis. We believe a sound corporate governance structure is essential for creating long-term shareholder value and prefer to initiate constructive, confidential dialogue with company management. We recognise the importance of effective communication with board directors and senior management about issues such as carbon footprint, board diversity, corporate governance and relations with shareholders, which is why most of the fund managers meet the management of around 90% of the stocks held in their portfolios.
As active investors, we recognise our responsibility to make considered use of voting rights, particularly in areas where we can encourage improved ESG practices. We are committed to promoting a governance culture of transparency and accountability within our investee companies, which is grounded in sound business ethics.
Our investment team applies a consistent philosophy and approach to corporate governance and the exercising of voting rights. CRUX aims to vote on all management advised proxy votes, and utilise the Broadridge ProxyEdge system to enable us to do this. We vote on numerous issues including, but not limited to, shareholder rights, board composition, remuneration and risk management. At the core of CRUX’s rigorous investment approach is finding businesses whose management have proven track records, as well as meaningful stakes in the companies they run. By this very nature, therefore, CRUX fund managers have to have significant confidence in the management’s decision-making ability as a prerequisite for holding the investee company. It is for this reason that CRUX’s default position is to vote with management, however we reserve the right to vote against management if we believe it is our clients’ best long-term interests.
As part of our commitment to ensure clarity of our investments to our clients, CRUX advocates for increased transparency from our investee companies and from ourselves. We encourage standardised and integrated reporting which incorporates sustainability information with financial information. As a company, we strive to be transparent in regards to how we incorporate ESG in our responsible investment activities. We publish our voting record on a quarterly basis via our website, as well as the policies which govern CRUX’s ESG integration approach; including our ESG Policy, Voting Policy and Stewardship Code.
Signing the internationally-recognised UNPRI allows CRUX to publicly demonstrate our commitment to responsible investment, and places us at the heart of a global community seeking to build a more sustainable financial system. As part of being a signatory to the UNPRI, we submit an annual assessment report in accordance with their guidelines. The principles and reporting tools allow CRUX to be held accountable and offer a framework in order to strive for improvement year on year through the lens of responsible investment.
In order to oversee, manage, and continually improve our responsible investment activities, we have established an ESG Working Group to provide oversight and guidance to the fund managers and Executive Committee. The Executive Committee have ultimate responsibility for the implementation of responsible investment and CRUX’s ESG approach at a corporate level.
This policy will be reviewed annually by CRUX’s ESG Working Group and Compliance Officer.