01 Strategy & Academic Basis
The Classic ESG Fund applies the same systematic factor methodology as the Classic Fund — targeting the market, size (SMB), and value (HML) premia — but overlays a rigorous ESG screening and scoring layer. Holdings are evaluated against MSCI ESG ratings, with exclusions applied to thermal coal, weapons manufacturers, and companies with persistent governance controversies.
Research by Friede, Busse & Bassen (2015) aggregating over 2,000 studies found a non-negative relationship between ESG scores and financial performance in roughly 90% of cases — suggesting ESG integration need not sacrifice returns. The portfolio targets an MSCI ESG Fund Rating of AA or above.
02 ESG Framework
03 Simulated Performance
04 Asset Allocation
05 Representative Holdings
| Security | Region | ESG Score | Weight |
|---|
06 Macro Positioning & Investment Thesis
This fund holds an honest tension at its core. An ESG-screened portfolio is structurally underweight fossil-fuel energy — the one sector enjoying a windfall from the Strait of Hormuz oil shock. Rather than pretend that headwind away, the strategy leans into the longer-run thesis the same crisis has strengthened: energy security through clean power.
The Honest Headwind ESG in an oil shock
It must be acknowledged plainly: when oil spikes — as it has following the 2026 Iran war and the closure of the Strait — portfolios that exclude oil and gas producers give up the most direct beneficiary. The fund does not dispute this short-term cost. What it disputes is that a single energy shock invalidates the long-run case. The same event that lifted oil prices also exposed how dangerous import-dependence on a single chokepoint is, accelerating government commitments to domestic clean power.
Energy Security The structural offset
More than 80 Gulf energy facilities have been damaged in the conflict, with restoration of pre-war output estimated at up to two years. For import-reliant economies — the UK chief among them, with imported LNG projected to climb from ~14% toward ~46% of gas supply — the lesson is that fossil dependence is now a national-security vulnerability, not merely an emissions problem. Clean energy generated domestically is, once built, cheap and immune to geopolitical blackmail. ESG-aligned companies positioned for that transition are the structural winners of a world that has just been reminded why energy independence matters.
Factor + Governance Quality through a different lens
Beneath the ESG overlay, the same Fama-French size and value premia drive returns, so the fund is not sacrificing rigour for values. The governance screen in particular acts as a quality proxy — well-governed companies tend to allocate capital better and carry less tail risk — which complements the profitability discipline of the Classic strategy while excluding names that fail environmental and social criteria.