Whether we agree with what politicians are doing doesn’t matter; they are acting – and those actions have consequences for the companies we invest in. We need to be on the front foot. Their products might be taxed, regulated or banned. Companies may be subject to windfall taxes, with the inevitable consequence for their balance sheets – and the security of future dividends.
Or – as we saw during the pandemic – dividends might need to be suspended if companies are to retain their social licence to operate. The social contract matters, upholding the social cohesion and the fabric of society can’t be done without corporates finding the right balance. We need to find dividends for our clients that are sustainable in the broadest sense.
Clearly, they must be financially sustainable (companies need to have solid balance sheets to support their pay-outs). But we also ask whether these businesses are sustainable in other ways:
- Is this company doing something that society needs?
- Is it working in tandem with governments – or pulling in the opposite direction?
- Might its products come to be regarded as socially or environmentally toxic?
Asking these questions doesn’t guarantee that we will avoid value traps – but it’s a good starting point to decrease the chance of buying companies that will eventually be on the wrong side of change and be forced to close down or cut their dividends.
Jacob de Tusch-Lec is fund manager of the Artemis Global Income Fund
FOR PROFESSIONAL AND/OR QUALIFIED INVESTORS ONLY. NOT FOR USE WITH OR BY PRIVATE INVESTORS. This is a marketing communication. Refer to the fund prospectus and KIID/KID before making any final investment decisions. CAPITAL AT RISK. All financial investments involve taking risk which means investors may not get back the amount initially invested.
The above information reflects the current view of the fund managers and may change over time. For information about formal investment restrictions relevant to this fund please refer to the prospectus.
Investment in a fund concerns the acquisition of units/shares in the fund and not in the underlying assets of the fund. Reference to specific shares or companies should not be taken as advice or a recommendation to invest in them. For information on sustainability-related aspects of a fund, visit www.artemisfunds.com.
The fund is an authorised unit trust scheme. For further information, visit www.artemisfunds.com/unittrusts.
Third parties (including FTSE and Morningstar) whose data may be included in this document do not accept any liability for errors or omissions. For information, visit www.artemisfunds.com/third-party-data.
Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.
Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.
Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.
