Climate Change Data

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Financial markets sold off sharply in early March when measures to contain the coronavirus outbreak brought economic activity to a near standstill.
• Labor market conditions in the U.S. quickly turned to the weakest levels since the Great Depression with numerous industries such as travel and hospitality bearing the brunt of the shutdown.
• COVID-19 put an official end to one of the longest economic expansions in U.S. history, plunging the economy into a severe recession by the end of the first quarter.
• Despite policymakers’ best efforts, a global recession has undoubtedly begun.
• The supply and demand shocks resulting from the initial lockdown have slowly abated, but the massive fiscal and monetary responses to cushion its economic blow are also complicating any accurate measurement of the economy’s trajectory.
• Companies that added significant leverage to their balance sheets in recent years by borrowing to fund dividend payments and stock buybacks may find it difficult to follow that path in the future, and investors may not reward them if they do.
• Recapitalizations by some of these highly-leveraged firms could dilute existing shareholders.
• Very long supply chains designed to squeeze out every bit of savings may be shifted closer to home markets if companies seek to put build an e-commerce presence.
• The aftereffects of the pandemic could affect consumer, business and government behavior in ways difficult to forecast.
• While markets have regained lost ground more swiftly than expected, any economic recovery is likely to be protracted.
• The reacceleration in COVID-19 cases in the latter part of the second quarter could lead to a second wave of layoffs and put further pressure on the economy.
• Other headwinds include escalating trade tensions with China and social unrest in the U.S.

Mitigation Strategies

• The rapid and extensive response of fiscal and monetary stimulus contributed to a quick rebound in financial market performance during the second quarter.
• Fixed income spread sector performance benefitted from the Federal Reserve’s (Fed’s) decision to include corporate bonds as part of its bond expanded purchase program, or quantitative easing.
• Our focus on new purchase activity remains concentrated among fixed-income sectors and securities benefitting from the Fed’s recent expanded bond purchase program.
• Fund holdings remain diversified across corporate and structured securities with overweight positioning to highly rated collateralized loan obligations (CLOs) and floating-rate bank hybrid securities.
• The gradual reopening of the economy on a state-by-state basis that started in mid-May, as well as positive vaccine news, also contributed to the rally in equity markets and credit spreads.
• Fund flows into credit accelerated as the market gained confidence that the Fed backstop was firmly in place and enabled corporate issuers to access the market.
• We continue to search for attractive entry points in the new issue corporate bond market as a source of excess return.
• We expect a continued recovery in valuations across our structured credit investments, albeit at a more moderate pace relative to the corporate bond market.
• Our opportunistic, value-based approach should benefit performance in a still uncertain economic and political environment.
• We have a balanced view of the current market and have leaned into risk in a measured way.
• We remain focused on identifying high-quality businesses with strong fundamentals that we believe can deliver solid earnings and the potential for growth over the long term.
• Our overall equity weight increased. We bought shares in the utilities and materials sectors and sold shares in the health care sector.
• Our overall fixed income weight was largely unchanged. We decreased our allocation to corporate bonds and high yield debt, while our position in bank loans increased.
• We are maintaining our overweight positioning in short duration spread sectors with an up-in-quality bias in light of continuing economic and political uncertainty in the U.S. and globally.
• We sensibly focus on the long-term prospects of our companies while also remaining mindful of valuations as they recover.
• We seek to own attractively valued companies that are good businesses exhibiting signs of improving success.
• We will continue to manage the Fund with our eyes focused on the long term, while being mindfully aware of the short-term risks presented by the pandemic recovery.
• We believe the U.S. economy is still on tenuous footing and the stock market is likely ahead of itself in assessing a return to economic growth and prospects for corporate profits.
• We will continue to conduct fundamental, bottom-up research in an effort to identify high-quality companies that we think can successfully navigate these transitory headwinds.
• We believe there is little doubt that businesses benefitting from shelter-in-place orders have weathered the volatility better than others.
• We continue to see structural challenges for recreation and entertainment companies, restaurants and travel-related businesses where the uncertainty of recovery is most critical.
• Despite the recent price moves in many fundamentally challenged sectors and stocks giving the “all clear” signal, we remain cautious given the sizable competitive headwinds they face.
• In addition, in a post-pandemic economy, many of these companies will need to alter their business models.
• We understand the credit risk headwinds of varying degrees in the near term.
• We continue to focus on owning high-quality companies with durable competitive advantages and balance sheets to weather economic shocks, with strict attention to reward-to-risk in the individual stock price.
• We welcome those opportunities to find new names with attractive reward-to-risk profiles for inclusion in the Fund.
• We had expected the world to deliver disappointing growth before the pandemic, and had focused the Fund on high quality companies in countries expected to be most resilient to what the Sub-Adviser has dubbed the four Ds: deglobalization, declining productivity, debt growth and depopulation.
• We are finding opportunities, for example, in Notre Dame Intermedica, a private health insurance operator that runs a large set of private hospitals and clinics in Brazil.
• A company with quality characteristics, such as low leverage, repeat demand and pricing power, can survive in the short run.
• But over the long run, sustainability is more important.
• Through our quality growth approach, we seek to reward investors by helping to identify businesses with predictable long-term earnings power.
• We believe REITs are well positioned for a challenging road ahead.
• Our analysis indicates most public REITs are in strong financial shape to withstand reduced demand and a temporary interruption in cash flows.
• Balance sheets are far less leveraged than in the global financial crisis of the previous decade, and real estate companies retain access to capital at attractive terms.
• The group offers a source of durable earnings from a diverse collection of sectors, with earnings reductions significantly less than those seen in broad equities.
• REITs’ valuations compare favorably with bonds (amid historically low interest rates) and stocks (based on cash flow multiple spreads vs. the long-term average).
• We believe single-family homes should demonstrate ongoing resilience despite the pandemic, especially as home affordability remains muted.
• Residences are a necessity and often take priority when families are making payment decisions.
• We also believe companies that provide data and logistics infrastructure, including data centers, cell towers and industrial warehouses, will continue to benefit from strong secular demand in the shift toward an e-everything economy.
• Data center demand continues to justify high valuation multiples, in our view, whereas tower and industrial REITs look somewhat expensive at current levels.
• We believe much of the pain is already priced in, creating potential opportunities in securities we expect will be long-term winners.
• We have become even more cautious toward offices based on oversupply and challenging leasing conditions amid weakening demand.
• We reduced our mid cap value exposure due to underperformance.
• We also moved allocation from SMID value stocks to large cap stocks to reduce exposure to companies vulnerable to the weak economy.
• We will continually review the Fund to help ensure that it remains consistent with its investment objective by making adjustments, when necessary.

Supply Chain Management

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used:

Certifications:

UN Sustainable Development Goals

• Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used:

Certifications:

UN Sustainable Development Goals

• Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed