Sustainable Investments

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1 Sustainable Investments Sustainability Newsletter January 2017 Editorial Climate policy as a competitive advantage Dear Reader In one of his last speeches as outgoing UN General Secretary, Ban Ki-Moon said: What once seemed unimaginable has become unstoppable. He was referring here to the series of measures to combat climate change agreed over the course of 22 highlevel summits. His successor, Portugal s António Guterres, who is due to take up office on 1 January 2017, will need to do business with the future US president Donald Trump, who during his election campaign denounced climate change as an expensive hoax. Since then, however, both China and Saudi Arabia two of the world s biggest emitters of carbon dioxide have made it clear that a US withdrawal from the Paris Agreement would not affect their own climate goals and policies. China is more important than the USA China has been setting the pace in climate policy for some time now. In an attempt to combat crippling air pollution and increasingly damaging water shortages, the Middle Kingdom has agreed ambitious climate protection measures in its latest Green Five- Year Plan. The Chinese government is setting the bar very high by stipulating that by 2020 at least 12% of all cars sold must be electrically powered. But it is also adopting a greener industrial policy. Car producers that have not invested enough in E-Mobility will fall behind not just in China, but worldwide. If the USA were to withdraw from climate agreements, it would inhibit the innovative drive of the US automobile industry and make it less competitive. For some time now, it has been clear that an effective climate policy is turning into a competitive advantage. CCPI: Climate change performance index Source: Germanwatch Indisputable success of climate policy The climate change performance index (CCPI) recently published by the NGO Germanwatch offers further proof that the battle against climate change continues to make steady progress. This index is compiled every year for each country, based on a series of objective criteria. These criteria range from the overall level and change in CO2 emissions, through to energy efficiency and the advancement of renewable energies. The quality of a country s climate policy also accounts for 20% of the score of its CCPI. The previous chart shows the performance of 58 countries responsible for 90% of all global emissions. Countries shaded in green have a good climate performance, while orange and red indicate a poor score. Renewables as a growth motor Naturally there is still clearly plenty of room for improvement. On the other hand, the study reveals some surprising successes. For the first time, for example, investments in renewables are posting double-digit growth in most countries and exceed the level of investment in fossil fuels. Oil consumption has now peaked. The consumption of coal is steadily falling and currently stands at its lowest level since There has been a huge increase in the efficiency of solar cells, LED lamps and building insulation. President-elect Donald Trump would be foolish not to try and exploit this enormous growth potential. We can only hope that his wish to make America great again will persuade him to take on the challenge of climate change on behalf of America as we move into the new year. Best wishes, Jan Amrit Poser Chief Strategist & Head Sustainability 1 Sustainable Investments January 2017

2 Review and outlook with Pierin Menzli, Head Sustainable Investment Research An eventful and politically charged year for investors focused on sustainability The past year has been dominated by political surprises such as the UK vote to leave Europe (Brexit) and Donald Trump s victory in the US presidential election. These events have also unsettled sustainably minded investors and leave many questions unanswered for the coming year. At the same time, the Paris Agreement on climate change negotiated by the UN has come into effect, and the first implementation measures have been ratified at the Marrakech Climate Change Conference in November Pierin, were you surprised by events in 2016? It was certainly an intense and turbulent year filled with political surprises. The result of the US presidential election did take me and most other market commentators by surprise. Apart from a few experts who had mainly concentrated on the very influential social media, most pundits were wrongfooted. The uncertainty created by the victory of the new president-elect has overshadowed the importance of another political shock: the UK vote in June 2016 to leave the European Union. Once again, the consequences of this event are very difficult to assess, because so many questions as to what form Brexit will take remain unanswered. So what are the consequences for sustainable investors? The outcome of the US elections has unleashed a fresh bout of euphoria in equity markets, which are heading towards new peaks as we reach the end of the year. In such phases, the fundamental valuation aspects and quality characteristics associated with a corporate strategy based on a longterm view tend to fade into the background. On the contrary, the main beneficiaries in the short term are companies in sectors which, from a sustainability perspective, offer poorer quality and higher risk. Investors often choose to ignore long-term investment risks, and the prospect of a short-term acceleration in economic growth fuels interest precisely in these corporations and cyclical sectors in general. For example, the energy sector has enjoyed a very strong performance, partly due to OPEC s decision at the start of December to reduce oil production quotas. The same applies to all the cyclical sectors such as industrial goods, basic and raw materials, as well as the financial sector. Chart 1 shows the performance of cyclical sectors since the US presidential election. Chart 1: Outperformance of cyclical sectors since the US election Trump Election ( ) FTSE USA Cyclical Index USD FTSE USA Defensive Index USD Source: Bank J. Safra Sarasin, 2016 Will this trend continue in 2017? Bearing in mind other important political events, such as the Paris Agreement on climate change coming into effect, we also see a number of major global developments that will provide some strong tailwind in the mid-term for sustainable and eco-efficient products and services. Chart 2 provides an overview of how we are constructing our sustainable investment universe in favour of green technologies. We believe that the quality characteristics of sustainably managed companies and business models will once again be appreciated in 2017 and that the brief rally by riskier companies and cyclical sectors will slow down. Chart 2: Variation in companies preparedness for a low carbon economy Source: MSCI ESG, Bank J. Safra Sarasin, 2016 What major trends will motivate sustainable investors in 2017? Clients have shown a keen interest in our recently introduced ESG portfolio analysis. This allows us to demonstrate to clients how their portfolio behaves with respect to the investment criteria they have defined and compared against the benchmark index. Chart 3 provides clients with a portfolio overview showing the individual positions from a sustainability perspective. The chart confirms that the ESG rating of the portfolio (blue square) is higher than the benchmark index (grey square). Chart 3: ESG portfolio analysis based on the Sarasin Sustainability-Matrix Sustainable portfolio Benchmark, Holdings Source: Bank J. Safra Sarasin, 2016 Nowadays clients also expect more specific analysis regarding their carbon footprint, reputation risk and the risk of stranded assets, such as fossil fuel reserves on company balance sheets which are not compatible with climate goals. The ESG portfolio analysis has introduced a new quality to client discussions. We are proud that this service allows us to satisfy a latent but frequently not explicitly communicated client need, which we can then discuss and address in a professional manner. The search for positive portfolio impact will be a key theme for clients in Sustainable Investments January 2017

3 Interview with Giles Money, Senior Portfolio Manager of Global Multi-Thematic Equities Performance is the result of the application of human brain power enhanced by computing Giles Money, Senior Portfolio Manager explains why investing in a multi-thematic and multi-discipline way leads to structural outperformance in global multi-thematic equity investing. Giles, you have a long standing experience as a multi-thematic investor. How would you describe the approach? At its very simplest multi-thematic investing is the discipline in which we take a very educated view on what we think the world will look like over the next 30 years. Whilst predicting some aspects can seem incredibly difficult, there are many areas of expertise available to us that can make our lives easier. From academic studies on the low carbon footprint of online shopping, to the future of fully automated farming, we use many seminal research papers to help us understand the true sustainability of companies. A headlinegrabbing quote might argue that healthcare spending per capita triples above 65years of age. People in this age group will nearly triple by 2050 in numbers. Understanding this has huge impacts on structural growth in the Healthcare sector. We believe the market is not perfectly efficient in discounting these trends. Our studies focus on subjects that are heavily backed by academia and science. We constantly review the landscape, but would highlight the following broad but visible trends that we actively invest upon: The Low Carbon Future Changing Demographics The rise of Emerging Markets Technological Innovation Is it enough to choose the right theme? As important as the theme is our multidiscipline investing approach which is the most critical part of our investment process. It is where a good idea meets its greatest scrutiny, because we believe a good idea or theme does not necessarily make a good investment. We base ourselves in quality business models with high returns on capital and most importantly the ability to rationally deploy that capital. The focus on deployment of capital for growth is really identical to the focus on sustainable thematic investing. This forward-looking approach allows us to value companies based on their outlook and not simply on their current profitability. At the same time we have to always be grounded by valuation and not overpay for this growth. As high growth stocks become excessively expensive we look to contrarian and value opportunities within our quality growth framework. This is a disciplined way to harness market inefficiencies backed by our considerable in house resources. While the human brain focuses on identifying the future, we use considerable computing power in our understanding of risk and reward. Performance is the result of the application of human brain enhanced by computing. Our in-house analysts are crucial for the fidelity of our financial modelling and our fundamental analysis of our investments. We meet hundreds of companies a year and publish significant volumes of research. Sustainable themes of the future Advanced Materials Health Systems Changing Consumer Mobility Energy & Climate Technical Disruptors Finance Future Water Source: BJSS Why do you invest globally? The rationale for investing globally is to be able to reflect each theme in the portfolio in the most efficient way. There is no rule for where the technological solutions for the future are based or invested and consequently we strive to reflect the best opportunities worldwide. For a well-diversified portfolio, you just need to select around 50 stocks from the identified global themes. We have found great companies with global relevance from India to Indiana and so it really is crucial we can access all markets for our quality approach. Comprehensive company analysis Source: BJSS How do you factor in ESG opportunities? ESG provides alpha in two distinct ways. It allows us to avoid stranded assets such as coal reserves. It also directs the debate on what a sustainable investment is. This should ultimately grow at a higher rate than the market with less tail risk for the shareholder. My job after the sustainability analysis is to make sure we are getting it at the right price. Having ESG embedded into the process is certainly more mainstream as a discipline than when I started ESG investing in That is validation in itself, and the reality is that Governance and Environmental factors are moving into the focus of all investors. My forecast would be that the world is beginning to wake up to the Social aspects as well. From youth unemployment in the middle-east to the rich kids of Instagram, we live in an increasingly distorted social backdrop that will have real world consequences. What is your outlook for 2017? For investors with a reasonable time horizon we provide a structured and well-resourced process to capture the best growth opportunities globally. Equities look good value relative to bonds and tend to mitigate inflation risk. Lastly, a focus on quality compounders provides downside protection. 3 Sustainable Investments January 2017

4 Latest studies from the Sustainable Investment Research Obesity and diabetes a global epidemic The prevalence of overweight and obesity, along with the associated disease diabetes, had been increasing over the last decades worldwide and has reached epidemic scale. The high costs and social burden engendered by these conditions make the reduction of their incidence a major global priority. Embedded in the fight against these problems are attractive opportunities for investors as the related markets grow. Obesity, a huge social challenge Obesity is a relentlessly growing trend, as its global prevalence has steadily risen over the last 30 years. This evolution has been observed in both developed and developing economies, creating a truly global challenge. As a result, more than 2 billion people are overweight or obese today. From direct health consequences and associated costs to hundreds of billions in lost productivity, the overweight epidemic has major consequences for society and combatting them has become a global priority. Solutions and opportunities to address obesity and obesity-related diabetes Obesity is a major cause of (type 2) diabetes. In fact, the incidence of both conditions has grown in parallel and reached unprecedented levels. In addition to the sheer size of the patient population and its long term growth, the chronic nature of diabetes requiring treatment for life and the health economic argument for intense treatment both enhance the appeal of the diabetes market. Thus, the global market for diabetes drugs alone amounts to USD 60bn and has grown at 15% p.a. in the last 10 years. Growth of overweight/obesity/diabetes Drug treatments for obesity and diabetes The options to treat obesity with drugs are very limited. Due to mediocre efficacy, significant safety risks and some rather spectacular failures in the past, this market has stayed quite small. While losing weight through diet and exercise is usually encouraged as a first step of type 2 diabetes therapy, this has a negligibly low sustainable success rate. Most patients are treated therefore with one or several of the many effective drugs, which have become available since insulin was discovered in the 1920s. Treatment has become more intense over the years, as it was realized that tight control of blood sugar is crucial to avoid the severe and costly complications of diabetes, which include heart attacks, strokes, limb amputations, blindness and kidney failure. Innovations in the fight against diabetes In the last few years, two new classes have been added to the arsenal against diabetes. Both are rapidly gaining in importance, because, in each class, a representative drug has been shown to reduce cardiovascular disease. This is a much desired effect of a diabetes drug, given that cardiovascular disease is the main culprit for the shortened life expectancy of diabetics. The first class are the SGLT-2 inhibitors, which lead to modest weight loss and lower blood pressure. The second class comprises the GLP-1 analogues. They are derived from the natural hormone incretin, which stimulates the release of insulin after a meal. In contrast to insulin, their risk to lower blood glucose below critical levels is small and they also help to lose body weight by promoting the feeling of satiety. Advances in Medical Devices Insulin use has traditionally involved taking measurements of blood glucose level with blood drawn through a finger prick and injections of insulin several times a day. Medical devices aim to make the use and proper management of insulin more hassle-free. The two main areas of innovation involve insulin pumps and continuous glucose monitoring (CGM) devices. An insulin pump provides the diabetic patient with short-acting insulin continuously. The latest types of insulin pumps are disposable, lasting about 3 days, and are discretely thin and are free of tubing to allow the maximum comfort. However, patients still need to track their blood glucose levels separately. CGM devices are wearable and track glucose level every 30 seconds. The sensors do not test blood but rather the fluid under the skin for glucose. Recently, the US Food and Drug Administration approved a so-called artificial pancreas. This is a wearable device that connects an insulin pump to a CGM device, allowing the pump to automatically inject small amounts of insulin based on the measurements of the CGM device to keep the patient s insulin level within the desired range. Companies that provide solutions Below is a selection of companies in our sustainable investment universe that contribute the fight against obesity and diabetes, as well as the associated high costs. Selection of sustainable companies Source: WHO, IHME, Bank J. Safra Sarasin, 2016 Source: Bank J. Safra Sarasin Chi Tran-Brändli Sustainable Investment Analyst MedTech David Kägi Sustainable Investment Analyst Pharma & Biotech Guillaume Krepper Sustainable Investment Analyst ESG 4 Sustainable Investments January 2017

5 Innovation in sustainable investments Sustainable high-yield bonds: not an oxymoron! The global universe of high-yield bonds that qualify as sustainable has achieved higher than average growth. In a persisting climate of low interest rates, the realisation of higher yields demands a more comprehensive analysis of the associated risks. The only way to reduce potential downside risks is to combine sustainability analysis with fundamental credit analysis. A growing market increases the range of sustainable high-yield bonds on offer The global market is booming for high-yield corporate bonds with a rating below investment grade. Many companies have had their credit ratings cut during the global financial crisis and because of the collapse in the oil price. On top of that, the rise in investment demand is also reflected in the higher emission volumes in the high-yield segment. While the US dollar bloc continues to be the dominant market for high-yield bonds and Europe remains relatively underdeveloped, sustainability has a much higher profile in the Eurozone market. Given the growing number of issuers from emerging-market countries, the universe offers additional sustainable investment opportunities, greater diversification and the chance of high returns. The global investment approach allows investors to exploit valuation discrepancies through appropriate market and sector allocations. The only way to take advantage of regional differences in credit cycles is on a global level. Growth of global high-yield bonds USD Billion (Par Value) Source: BofAML Sustainability analysis is particularly relevant for companies issuing high-yield bonds By their very nature, companies with poor credit ratings tend to promise higher yields but at the same time present higher credit risks. In a climate characterised by persistently low interest rates, a more comprehensive analysis of the company-specific risks is essential in order to avoid losses. Generally speaking, high-yield companies from established sectors tend to have a higher level of debt in order to achieve better returns on equity. Or they come from riskier industries such as the energy sector. Particularly with this type of company, we are convinced that the analysis of corporate governance and due consideration of environmental risks are essential. Here sustainability analysis is a very important complement to our fundamental credit analysis. Only if a company is capable of servicing its debts can we, as investors, reduce downside risks and generate higher returns. No correlation between ESG & credit rating ESG Rating Score D C CC CCC B BB Credit Rating Source: MSCI Positive effect of sustainability Because bonds with lower credit ratings generally carry higher risks, many investors see a contradiction with the category of sustainable bonds, which tend to be of higher quality. However, our analysis fails to identify either a positive or negative correlation between the ESG scores and credit ratings. By contrast, many academic studies show that superior ESG ratings potentially enhance the performance and reduce the default risk. Challenges for high-yield bond managers Managing a sustainable high-yield bond strategy successfully requires an immense research effort and a highly disciplined investment process. The expertise of many different departments contributes towards this. The global universe is analysed for sustainability and then narrowed down according to liquidity, currencies and covenants. The top priority here is to avoid corporate bankruptcies and bond defaults. Fundamental credit analysis is therefore essential. Only our many years of experience allow us to differentiate between risks and the usual market fluctuations frequently encountered in the high-yield segment. Comparison of 1-yr vs. 5-yr returns 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Y Return 5Y Returns, ann. Source: BofAML Good environment for positive returns The same rule applies to sustainable highyield bonds: in an environment of rising interest rates, they tend to benefit from narrowing credit spreads and they show a much weaker correlation with the sovereign bonds of developed markets. The current climate of modest rises in interest rates does generates headwind for bond investors. However, it is sovereign bonds (presumed to be more secure) that will suffer more from outflows than riskier forms of investment such as sustainable global high-yield bonds, which promise attractive returns. Roland Müller Deputy Head Bonds & Absolute Return 5 Sustainable Investments January 2017

6 Bank J. Safra Sarasin: events and publications Promoting the sustainability agenda Active dialogue, or engagement, on sustainability and sustainable investments is a key component of our investment process. On the one hand, this involves direct conversations with the managers of companies whose shares we hold. On the other hand, we engage with decision-makers in industry associations and players in the financial sector as a whole in an effort to embed sustainability more firmly in the investment process. Taking part in podium discussions and contributing to publications also play an important role here. SIX Group s Green Bond event In November, the Swiss Stock exchange (SIX) and the International Capital Markets Association (ICMA) organised Switzerland s first-ever major investor event focusing on green bonds. The large audience of institutional investors was given a market overview of these impact-oriented investments which finance projects to improve the environment. The latest developments were debated as part of a panel discussion, where the invited market players included Pierin Menzli, Head Sustainable Investment Research, representing Bank J. Safra Sarasin. Pierin Menzli at the Green Bond event Source: SIX Frankfurt Conference on Sustainable investments Every year the Frankfurt School of Finance and the Forum Nachhaltige Geldanlagen (FNG) organise a joint conference in Frankfurt where the latest developments in the field of sustainable investments are presented. One of the main themes of this year s event was the growing demand for investments that combine sustainability with financial risk factors such as value or momentum. During the panel discussion, Jan Amrit Poser presented the Sustainable Factor Beta strategy developed by Bank J. Safra Sarasin and explained the positive risk/return characteristics of such an investment approach. There was general agreement among panellists that the trend towards greater differentiation in asset management is continuing. Jan Poser on the podium in Frankfurt Source: Frankfurt School Verlag Impact Forum Salzburg, Austria The annual forum organised by CSSP, an independent consultancy specialising in sustainability and domiciled in Liechtenstein, is Austria s leading event for impact investing. This approach is attracting growing interest, as investors are not only interested in ensuring that their money is effectively invested, but also want to see what positive impact it has. In his keynote speech, Jan Amrit Poser explained how Bank J. Safra Sarasin is able to demonstrate this impact to its clients: firstly, through detailed reporting on performance measured against environmental, social and governance (ESG) criteria not just of the portfolio, but of every single position. Secondly, by visualising the carbon footprint and the risks associated with fossil fuels. Thirdly, by listing opportunities, such as the proportion of the company s revenues driven by water supply. Other elements include the reporting of voting activities at annual general meetings of shareholders. These reports can also be made available to non-clients. SSF Handbook of Sustainable Investments On 28 November, Swiss Sustainable Finance (SSF) invited over 100 people to attend the launch of their new handbook. This is an important milestone for SSF, and is intended as a practical guide for institutional investors. It also acts as a very useful manual for sustainable investors. Bank J. Safra Sarasin is a founding member of SSF and was heavily involved in drafting the new handbook on sustainable investments. On the one hand, Pierin Menzli, Head Sustainable Investment Research, sat on the committee advising the editors. On the other hand, Agnes Neher, Sustainability Manager and Philipp Mettler, Sustainable Investment Research Analyst, both contributed one chapter each. High calibre panellists in Vienna Source: BJSS Vienna: innovation in sustainable investments In December, there was an event jointly organised by Bank J. Safra Sarasin and MSCI, the Swedish environmental foundation MIS- TRA and the Investment Innovation Benchmark (IIB) in Vienna. Leading decisionmakers from sustainably oriented Austrian pension funds ( Vorsorgekassen ) got together with pension fund representatives from other European countries in the Hotel Park Hyatt to discuss how sustainable investors can contribute to the attainment of the Sustainability Development Goals set by the United Nations and at the same time generate superior returns. They concluded that achieving this requires a robust data standard, in-depth data analysis and effective reporting in order to further improve quality standards. There was a general consensus among the panellists that sustainable investments constitute a fiduciary duty for institutional investors. 6 Sustainable Investments January 2017

7 Sustainable Investment Research Selected sustainability profiles and rating updates in the fourth quarter of 2016 Roche: Up for the challenge Roche is a Swiss pharmaceuticals and diagnostics company. It addresses all typical challenges in its industry to which it is highly exposed given its global scale. Through a broad Access to Healthcare program, the company has indeed built a strong position to contribute to and benefit from the improvement of healthcare in developing countries. Furthermore, corruption risks associated with business development in emerging economies are mitigated through adequate measures. On the manufacturing side the picture is however mixed. Roche has taken convincing measures to address environmental issues while product safety and quality remains a field of potential progress despite efforts to reduce related operational, business and legal risks. Overall and on a relative basis, Roche s rating is average. Ryanair: Flying too low Ryanair is a low-cost airline operating mainly in Europe. The biggest ESG impact of airline companies is linked to carbon emissions and environmental pollution. In this regard, Ryanair reports on fleet optimization measures, improving fuel efficiency and noise control. The company however lacks clear targets unlike most of its peers. From a social perspective, persistent labor disputes highlight potential structural deficiencies in human capital management with impacts on the operations continuity and quality. From a governance perspective, Ryanair is in line with industry practices while performing well on service quality. Overall and on a relative basis, Ryanair s rating is no longer high but above average which is insufficient to be eligible for the sustainable investment universe given the high challenges faced by airline companies. emissions and waste approach, both currently slightly below the peer group, would help the company to continue thriving on this sustainability trend. Same applies to corruption prevention where evidence of policy implementation is limited. From a human capital perspective, Mueller Water's set up is superior to most of its peers in mitigating operational disruption risks and retaining talents. Overall and on a relative basis, Mueller Water has therefore an average company rating and is eligible for the sustainable investment universe. Sarasin Sustainability-Matrix Alphabet: a great place to work Alphabet (Google holding) is top-ranked for human capital and data security, two critical aspects in the sustainability of internet companies. Its strong employee benefits along with technology leadership make it one of the most attractive employers. The company also has best-in-class privacy and data security standards, including advance encryption and privacy enhancing technologies or the monitoring of business partners' data security. However, due to its high brand visibility, Alphabet has been under regulatory and public scrutiny (e.g. for antitrust matters). Corporate governance is also a concern due to the concentration of power in the hands of its founders through unequal voting rights and the lack of board independence. Though a majority of board members are independent, the Chairman and Lead Director are not and the average board tenure is high. This results in an aboveaverage sustainability rating for Alphabet which is now part of the sustainable investment universe. MasterCard: data privacy & security With 50 billion transactions processed each year, MasterCard is one of the most exposed companies to data privacy and security. Over the past few years, the company has strengthened its security strategy amid growing risks of cyber-attacks and card data theft. It launched a USD 20m program in 2015 to test biometric authentication systems and the MasterCard Safety Net that will use algorithms to detect fraudulent transactions in real time. However, progress could be made regarding data privacy. Like Visa, the company leverages customer data through analytical services to help merchants for their marketing campaigns. It provides its customers with a way to opt out from its analytic activities though. Coupled with a strong human capital management but relatively poor governance performance (Multiple Share Classes), the company s rating is slightly below the sector average but enough to enter our sustainability universe. Sustainable Investment Research Mueller Water Products: Core business tied to sustainability trends Mueller Water is an industrial company offering products and services in water transmission, distribution, and measurement. The company is indeed well positioned in the water space. Stronger Research & Development and a more comprehensive 7 Sustainable Investments January 2017

8 Disclaimer The information contained in this marketing publication does not constitute an offer or a solicitation to buy units of the fund. All details are provided for marketing and information purposes only and should not be misinterpreted as investment advice. This publication was not produced by our financial research department and is not the result of such financial analysis. The Swiss Bankers Association s Directives on the Independence of Financial Research do not therefore apply. The Bank and/or the fund distributor may receive or pay one-off or recurring compensations in connection with this product, as a quality improvement incentive, details of which are freely available on request. All opinions and estimates are based on the best of our knowledge and belief at the time they are published and are subject to change without prior notice. As some of the information contained in this publication comes from third-party sources, no guarantee can be given regarding its accuracy, completeness or reliability. Sources of performance data: Sarasin Investmentfonds Ltd, Datastream & Swiss Exchange SIX. Performance was calculated on the basis of net asset values (NAV) and gross dividends reinvested. When calculating performance, all the costs charged to the fund were taken into consideration in order to determine the net performance. The performance stated does not include any commissions and costs incurred by the investor in buying or selling fund units. Additional commissions, costs and taxes incurred by the investor have a negative impact on performance. Past performance is not a reliable guide to performance in the future. The value of your investment can go up or down. The return on investments can therefore fluctuate. As a result, there is no guarantee that investors will get back the full amount of their original investment when redeeming fund units. Investments in foreign currencies can carry a currency risk, as the return in the investor s currency can fluctuate due to exchange rate movements. Persons domiciled in the USA or US nationals are not allowed to own units in the funds of Sarasin Investmentfonds SICAV, and it is illegal to publicly offer, issue or sell these investment fund units to said persons. This publication is only intended for investors based in Switzerland and Germany. Investors should read both the sales prospectus and the key investor information documents (KIID) before making an investment. For investors domiciled in Switzerland Sarasin Investmentfonds SICAV is an Undertaking for Collective Investment in Transferable Securities (UCITS) organised as an openended investment company (société d investissement à capital variable SICAV ) under Luxembourg law and regulated by the national regulator, Commission de Surveillance du Secteur Financier ( CSSF ). This fund is a sub-fund of Sarasin Investmentfonds SICAV and has been authorised for public sale in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). Copies of the current prospectus, the key investor information documents ( KIID ), the articles of association and the annual and semiannual reports are available free of charge from the paying agent (Bank J. Safra Sarasin Ltd, Elisabethenstrasse 62, CH-4002 Basel) and the representative in Switzerland (Sarasin Investmentfonds AG, Wallstrasse 9, CH-4002 Basel, Switzerland). Bank J. Safra Sarasin AG Elisabethenstrasse 62 POB 4002 Basel Switzerland Phone + 41 (0) Fax + 41 (0) Bank J. Safra Sarasin (Deutschland) AG Taunusanlage Frankfurt am Main Germany Phone +49 (0) Fax +49 (0) For investors domiciled in Germany Sarasin Investmentfonds SICAV is is an Undertaking for Collective Investment in Transferable Securities (UCITS) organised as an open-ended investment company (société d investissement à capital variable SICAV ) under Luxembourg law and regulated by the national regulator, Commission de Surveillance du Secteur Financier ( CSSF ). This fund is a sub-fund of Sarasin Investmentfonds SICAV and has been authorised for public sale in Germany by the Federal Financial Supervisory Authority (BaFin). Copies of the current prospectus, the key information for investors (KIID), the articles of association, as well as the most recent annual and semiannual reports are available free of charge from the paying agent (Bank J. Safra Sarasin (Deutschland) AG, Taunusanlage 17, D Frankfurt am Main) and the representative in Germany (Bank J. Safra Sarasin (Deutschland) AG, Investment Fund Division, Lenbachplatz 2a/6th Floor, D Munich). Imprint Bank J. Safra Sarasin AG Asset Management Elisabethenstrasse 62 POB 4002 Basel Switzerland Phone + 41 (0) Fax + 41 (0) Sustainable Investments January 2017