Sarasin & Partners LLP is a London-based asset manager that manages £14.4 billion (as at 31.12.17) on behalf of charities, institutions, intermediaries, pension funds and private clients, from the UK and around the world.
We are known as a market leader in global thematic investment and for long- term income and dividend management across multi-asset and equity mandates. Consistent with a longer-term approach is a commitment to 'stewardship' principles, embedding environmental, social and governance considerations into the investment process.
The charities division at Sarasin & Partners manages £6.52bn for approximately 410 charity and not-for- profit clients (as at 31.12.17). This represents over 40% of our total business.
We have a global thematic approach to stock selection that we pioneered in the UK over 20 years ago. The process is based on finding inevitable trends in which we can all share high conviction: the key is to identify these trends early, before they become consensus. Ultimately, we believe it matters more where and how a company makes its profits and rather less where it is listed.
The first step is idea generation: identifying the themes that are shaping the investment landscape over the long run. We look specifically for differentiated themes with a long duration (5-50 years) and which are often interrelated:
changing demographics will impact anything from healthcare consumption to the need for improved savings provisions or perhaps influence lifestyle choices through dietary change or increased global travel.
Our goal is to quantify the size of the addressable market and then to build a list of companies which offer meaningful exposure to a theme on a long-term basis. The end result of our stock selection process is a high conviction buy list from which we construct portfolios.
A crucial element of portfolio construction comes from understanding the life cycle of companies. Some companies will be growing rapidly and as a result may trade on a premium valuation. While they might seem expensive today we are more interested in the value of their projected cash flows over the next five or ten years. At the same time we also want to include in our portfolios established market leaders with strong brands, generating prodigious levels of free cash-flow, which can either be returned to investors via progressive dividends (attractive in a low interest rate environment) and/or reinvested in the business to retain their competitive advantage.
By building portfolios from companies with a spread of these corporate characteristics we achieve diversification and an improved risk profile. Ultimately, though, we construct concentrated portfolios focused on secular themes, which present robust growth opportunities over multi-year periods.
In summary, our equity selection process rests on four key principles: a long-term thematic approach, thinking globally without regional barriers, meticulous stewardship of our clients' assets and active management.
When designing the most appropriate strategy for each of our clients, we consider a wide range of asset classes, working with trustees to blend them to create portfolios that suit their charity's particular investment objectives.
We aim to construct bespoke portfolios that balance 'market risk' with 'manager risk' while keeping costs to a minimum and the administrative burden as low as possible.
We place significant emphasis on transparency, liquidity and assets that produce a sustainable income, but acknowledge that certain more illiquid and alternative asset classes can add value and reduce volatility. The key tenets of Sarasin & Partners investment philosophy are:
Strategy and risk management comes first– it is essential for us to gain a genuine understanding of each charity's objectives to help us create an appropriate strategic investment policy. Only long-term monies should be invested in volatile asset classes. We aim to create investment policies that are robust under a range of scenarios and seek to avoid any of our clients becoming 'forced sellers' at inopportune moments.
Global thematic equity selection – where and how a company operates matters more than where it is listed. Our global thematic process knows no geographical bounds and it simply seeks to identify the most attractive global companies before their appeal becomes the consensus.
Dynamic tactical asset allocation – having agreed a strategic asset allocation and discretionary operating parameters around it, we seek to add value and reduce volatility by taking advantage of valuation anomalies.
Ensure natural income makes up the bulk of regular spending requirements – while we suggest charities operate a 'total return' approach to withdrawals we are not agnostic about income. We believe a sustainable income stream lies at the heart of a successful investment strategy. By diversifying investments within and across a wide range of asset classes, we have a history of providing trustees with a reliable income stream that grows consistently despite market volatility.