Funds Group: 1919 Funds
Management Company: 1919 Investment Council, LLC
Funds Affected: 1919 Socially Responsive Balanced Fund
Principal Sustainable Investment Strategy: ESG Integration, Exclusions
1919 Funds Summary:
The fund emphasizes companies that offer both attractive investment opportunities and demonstrate a positive awareness of their impact on the society in which they operate. The fund believes that there is a direct correlation between companies that demonstrate an acute awareness of their impact on the society within which they operate and companies that offer attractive long-term investment potential. The fund believes that actively addressing environmental and social issues can translate into sound business. The fund will use its best efforts to assess a company’s environmental and social performance. The adviser will monitor the related progress or deterioration of each company in which the fund invests.
Socially responsive factors considered include fair and reasonable employment practices, contributions to the general well-being of the citizens of its host communities and countries and respect for human rights, efforts and strategies to minimize the negative impact of business activities and to preserve the earth’s ecological heritage and avoidance of investments in companies that manufacture nuclear weapons or other weapons of mass destruction, derive more than 5% of their revenue from the production of non-nuclear weaponry or derive more than 5% of their revenue from the production or sales of tobacco, or have significant direct exposure to fossil fuel real assets.
Reporting and Disclosure:
December 31, 2017 Annual Report: The fund’s annual report notes that the fund is managed using socially responsible investment guidelines. An element of these guidelines is that the fund is invested using a “fossil free” approach whereby it does not invest in companies with a large carbon footprint and it seeks to invest in companies that address the challenges of climate change. The fund manager goes on to note that throughout the year, the fund maintained overweight positions in the Financials, Health Care, Industrials, and Information Technology sectors and underweight positions in the Energy, Real Estate, Telecommunications and Utilities sectors.
The fund, which offers four share classes from Class A, Class B, Class C to Class I, posted annual returns of 16.36%, 15.33%, 15.47% and 16.71%, respectively, for the one-year period ended December 31, 2017 before the application of relevant sales charges. Two share classes outperformed a blended index consisting of 70% S&P 500 and 30% Bloomberg Barclays US Aggregate Index that was up 16.08% over the same time interval.
Beyond reiterating the fund’s socially responsible investment guidelines and its emphasis on a “fossil free” investing approach, no additional commentary is offered in its annual report regarding any ESG considerations and exclusions relative to the positioning of the fund’s portfolio or investment decisions. Nor did the fund offer any observations regarding the impacts or outcomes that may be linked to its sustainable investing practices.
About 1919 Investment Counsel, LLC:
Headquartered in Baltimore Maryland, 1919 Investment Counsel, LLC operates as a subsidiary of Stifel Financial Corp. (SF), a publicly listed financial services holding company headquartered in St. Louis, Missouri that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. The investment management firm subsidiary traces its roots back to Scudder Stevens & Clark, one of the earliest entrants into asset management that was founded in 1919. It was subsequently acquired by Zurich Insurance Co. and then again by Deutsche Bank in 2002. The precursor to 1919 Investment Council was created by combining four offices of the Scudder Private Investment Council business with the Legg Mason Investment Counsel & Trust Company, N.A. upon Legg Mason’s acquisition of the business in 2004. In 2014, the firm joined Stifel Financial Corp, and was renamed 1919 Investment Counsel, LLC, a reflection of the Scudder investment culture and reputation for providing independent advice and high-end client service.
Managing some $12 billion in assets for individual and institutional investors, including the assets of Rand & Associates that was acquired in October 2018, 1919 Investment Council employs a staff of about 108. About 47 of these individuals perform investment advisory functions.
The firm’s assets also cover three mutual funds with $491 million in assets as of November 30, 2018, including the $139.4 million 1919 Socially Responsible Balanced Fund. The fund was started as of November 7, 2014 by assuming the performance, financial and other historic information of the Legg Mason Investment Counsel Social Awareness Fund.
According to the firm’s website, a dedicated Socially Responsive Investing (SRI) Department with a team of experienced professionals is focused exclusively on the alignment of values-based client investments and on environmental, social, and corporate governance, or ESG investing. Approximately $1.2 billion (as of September 30, 2018) in socially responsive client assets are managed by the firm.
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