Saturna Sustainable Equity Fund portfolio manager Jane Carten told Opto in an exclusive interview that she is excited by Sony’s [SONY] prospects in the electric vehicle market. Carten, who is also the president of Saturna Capital, said that Sony featured on the ESG fund for its environment consciousness, but its prospects in the electric vehicle market would fuel the stock.
“I really like Sony, which we’ve had in the portfolio for a long time,” she said, “I'm really excited about the electric car that they built.” The tremendous opportunity in the EV space for Sony is not so much the finished product, but more the components it could supply in the market, Carten said. Sony unveiled its electric vehicle, which it said was already being road tested, at the Consumer Electronics Show in Las Vegas last month.
“I don't think they’re going to be a huge seller of electric vehicles. However, I do think that they may be a huge supplier of components for other companies who are making electric vehicles and I'm excited about that one,” she said.
“I don't think [Sony] are going to be a huge seller of electric vehicles. However, I do think that they may be a huge supplier of components for other companies who are making electric vehicles and I'm excited about that one” - Jane Carten
Carten has been a lifer at Saturna, having joined the firm in 1997 and moved up the ranks virtually from the mail room to the corner office. She now oversees Saturna’s daily operations and directs the company’s internal and external technology and marketing activities, in addition to its education programme and philanthropic efforts.
Saturna believes that companies managing business risks relating to environmental, social and governance issues are more resilient to change and the evolving global economy. As a result, its flagship Saturna Sustainable Equity Fund [SEEFX] looks at companies taking responsible actions in the path to profitability. “We take a lot of time on the buy side and only put companies who we really do want to partner with long term into the portfolio before we before we make the decision, and when we put them in, we are expecting to own them for years,” Carten explained.
She describes the process of stock selection as a bit “like being a matchmaker”. Selections in the stock markets can be about picking the “bad boy” associated with being fun and loud, but it will “probably break your heart”. Selecting companies in an ESG portfolio, on the other hand, Carten likens to “the super solid, boring guy who has perfect LSAT scores, went to an Ivy League University, has an excellent credit score, is going to remember your birthday, your anniversary, and is going to bring flowers.”
Step one for the portfolio thus is to eliminate certain sectors that do not fit into the ESG space, such as alcohol, tobacco, firearms, casinos and fossil fuels. Then, benchmarking based on the reliance on materials determines what reporting would best guide the ESG responsibilities of a company in the segment.
“I really try to keep the portfolio geographically diverse,” Carten said, adding that “while it has hurt in the last year, because the US has done so well, I expect that my patience will pay off.” As things cool off in the US with the expected monetary policy changes, Carten believes “having that more diversified geographic footprint will work well for the investors in the fund”.
Another company that makes the cut in Carten’s view is Swedish security group Assa Abloy [ASAZY]. It “has been a good investment for us and I think will continue to be,” she said.
Saturna has also taken a small position in FMCG major Unilever [UL]. “Obviously, there was a lot of news around Unilever, so it’s top of mind,” said Carten. Unilever’s shareholders have pushed for a split of the company to focus on specific segments rather than remaining a diversified group with products ranging from food to cleaning supplies. The pressure has mounted in the face of a failed acquisition attempt for the consumer health business from GlaxoSmithKline [GSK].
According to Carten, “there are still bullies out there” who would prioritise profits over responsibility. “We have to say no, it is important that we run our companies in a way that we’re proud of, and that we’re treating everybody nicely.”
“There are still bullies out there [who would prioritise profits over responsibility]. We have to say no, it is important that we run our companies in a way that we’re proud of, and that we’re treating everybody nicely” - Jane Carten
With reference to parking cash or investing it all, Carten said that given the overall market conditions, “we would absolutely, fully deploy right now”. “It really is a defensive position that we grew over the last couple of months and I feel fine about that today,” she added.