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SIMPLYBIZ INVESTMENT SERVICES

Quality and sustainable investment are closely intertwined , with certain studies even suggesting that three quarters of the outperformance of ESG strategies can be directly attributed to the quality factor 1 . However , although the correlation is significant , the causal relationship between the two does not appear to be clearly established . At Carmignac , we firmly believe that quality and sustainable investment are two sides of the same coin that mutually strengthen each other in a virtuous cycle .

THE NEED TO DEFINE QUALITY

For over 20 years , Mark Denham , co-manager of the fund , has asserted that long-term performance relies solely on the ability to select companies with the best prospects . These companies , which Mark refers to as ' quality ', must meet specific criteria :

• They must be able to generate high and stable profits over time , which they can reinvest to sustain their growth trajectory .

• They must also have a positive impact on the environment and society .

This conviction has been quantified through a detailed investment process . However , the initial philosophy of excluding the worst-performing companies and rewarding the most promising on financial and extra-financial criteria has remained unchanged .

1

Bruno G , Esakia M , Goltz F , Honey , I shrunk the ESG alpha : Risk-adjusting ESG portfolio returns . Scientific Beta Publication , April 2021 .