The fund

The aim

A high conviction portfolio that aims to deliver growth in both income and capital over rolling five-year periods and a yield above the MSCI World Index through active ownership of companies that demonstrate strong dividend growth and compelling sustainability credentials.

Dividend investing

We prefer our companies to offer attractive dividend growth rather than a high dividend yield. The ideal dividend company can maintain their asset bases, reinvest in growth opportunities and pay dividends without excessive financial leverage or compromising their allocation of capital. Our dividend analysis therefore focuses on financial leverage and liquidity to help us identify the threats to future cash flows and dividend sustainability. Our dividend stress test highlights what scenarios  might put the dividend at risk helping us identify companies that cannot afford their dividend.


Sustainable credentials

We focus on companies with strong sustainable credentials that are driving, facilitating, and promoting positive change – directly or indirectly – across a broad range of areas, from energy wastage, building emissions and power management to food waste, sustainable food diets and raw material depletion. Our proprietary Sustainability Scorecard forms the first part of our company analysis. If a company scores negatively we will not proceed with our research analysis. In addition, we exclude companies that derive more than 10% of revenues from the production or sale of tobacco, alcohol and weapons; adult entertainment; fossil fuel extraction and the provision of gambling services.

Meet the Sanlam Sustainable Global Equities Team

Mark Whitehead
Mark Whitehead
Fund Manager
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Alan Porter
Alan Porter
Fund Manager
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Eva Kubicka
Eva Kubicka
Investment Analyst
View profile

Why invest in the fund?

  • Our dividend investing credentials - We aim to yield above the MSCI World Index and deliver real dividend growth each year
  • Our sustainability credentials - Sustainability analysis is the first part of our research process. We do not invest in companies that fail our proprietary sustainability analysis
  • Global diversification - We invest globally allowing us to choose the best sustainable global dividend companies wherever they are.
  • High conviction, low turnover, low cost
  • Robust and repeatable investment process - The 2 fund managers have a strong dividend track record and consistently high performance relative to the peer group.
  Global Equity Income 1 Yr 3 Yrs 5 Yrs

Securities Trust of Scotland Ord

5.49% 22.53% 75.31%
Peer group

Morningstar EU, Africa & Asia
Open End Global Equity Income

1.36% 13.08% 65.13%

Past performance is not a guide to future performance. The data above is cumulative and covers the periods to 11/11/2020 when the managers were managing the trust. They do not manage this trust anymore.

Source: Morningstar as at 31/12/2020. All returns are cumulative, denominated in GBP

  • Investors are seeking attractive growth and reliable dividends from an actively managed fund. We believe dividends are paramount for wealth creation
  • They are increasingly conscious of their environmental and social responsibilities. We believe sustainability will drive future outperformance
  • Active ownership creates value by promoting improvement
  • That is why we are introducing the Sanlam Sustainable Global Dividend strategy. 

Our Environmental, Social and Governance approach:

We believe that to be credible in this space the following are key:
  • Sustainability analysis should be fully integrated in the research process
  • Exclusions and the use of sustainability analysis to rule out stocks from the fund
  • Demonstrating engagement and positive improvement
  • Independent validation of sustainability credentials.

 Our credible approach:
  • Sustainability analysis is the first part of our analysis on each company
  • We exclude several areas of the market and will not purchase companies that score negatively on our sustainability scorecard
  • Engagement is a key part of our approach
  • Our portfolio currently scores well on MSCI ESG ratings.



We believe sustainable dividend investing leads to better outcomes for all stakeholders.

Mark Whitehead, Fund Manager

Fund Commentary

October 2021

Fund performance* MSCI World performance
+6.68% +5.66%
Top 3 positive contributors Top 3 negative contributors
Microsoft Capcom
Merck Danone
Home Depot AIA Group
Buys Sells
Capgemini Danone

Past performance is not a guide to future performance. Total return, NAV to NAV basis, net of charges, assumes net income reinvested.

Dividend update
  • JPMorgan paid a quarterly dividend of $1.00 versus $0.90 last year representing an 11% annual increase. The global investment bank has increased its annual dividend by $0.10 in each of the last few years and the stock now yields over 2.2%.
  • Bank OZK is unusual in that, unlike most US companies, it raises its dividend each quarter rather than once a year. The real estate lender paid a $0.29 quarterly dividend an increase of over 5% versus last year. The stock yields over 2.5%.
  • Caterpillar went ex a $1.11 dividend a near 8% increase versus last year. Caterpillar yields 2.1%.
  • P&G declared a $0.8698 quarterly dividend an increase of 10% compared to a year ago. P&G has increased its dividend for 65 years in a row and yields over 2.4%.
Sustainability update
  • McDonald’s announced its commitment to achieving net zero emissions across its global operations by 2050 and signed on to the Science Based Targets initiative (SBTi). This will mean increasing the emissions reductions across their restaurants, offices and supply chain and enabling teams across the world to innovate and implement locally tailored solutions in renewable energy, regenerative farming, circular economy, and sustainable packaging.
  • BlackRock’s Q3 results confirmed their leading sustainability ETF (exchange traded fund) provider status as they captured nearly 50% of the industry category inflows year-to-date. The company highlighted that in Europe, almost half of all industry flows are now going into sustainable ETFs, up from less than 10% just three years ago.
  • Caterpillar announced that it is creating the position of chief sustainability and strategy officer as it looks to enhance its ESG activities. The company also announced that its Board will incorporate ESG in the 2022 incentive plan for executive officers. The Chairman and CEO, Jim Umpleby, said “Sustainability is an important element of our long-term strategy for profitable growth”.
  • Schneider Electric’s SF6-Free Medium Voltage Switchgear was named Green Product of the Year at the Annual China CSR Conference is Guangzhou. SF6 (sulphur hexafluoride) is an extremely potent greenhouse gas used as an electrical insulator. Schneider has designed their switchgear product to replace SF6 with a combination of vacuum technology and pure air insulation.
  • Apple flagged some of the efforts they are making in reaching carbon neutrality across the entire supply chain and the life cycle of devices by 2030. The iPad and iPad mini now come with a 100% recycled aluminium enclosure. The antenna on the iPhone 13 is made of up-cycled plastic water bottles. Eliminating outer plastic wrap on iPhone 13 packaging should save 600 metric tons of plastic. Apple target the removal of all plastic packaging by 2025. In the Apple Watch Series 7, 99% of the rare earth elements used are recycled. Apple target (in the long term) making products without taking anything from the Earth.


Q3 2021

Fund performance
(1 Jul - 30 Sep)*
MSCI World performance
 (1 Jul - 30 Sep)
-1.21% -0.01%
Top 3 positive contributors Top 3 negative contributors
Vivendi Kering
Accenture VF Corp
DSM Caterpillar
Buys Sells
Trane Technologies Verizon
Capcom Unilever
Anthem Vivendi
  Air Products
  • The FOMC have signalled, barring any imminent bad economic data, that the taper will arrive in November and end next Summer. The “dots” show that half the committee have now said they expect rates to rise once next year. This confirms we are well in the mid/late cycle phase and 10Y Treasury yields rose at the end of the quarter.
  • As interest rate increases become closer, we favour as balanced an approach as possible, understanding that we will be o/w yield and u/w growth, as we expect style leadership to remain inconsistent as interest rate increases get closer.
  • Equity valuations remain expensive, but risk premiums generally favour equities over credit and government bonds. There is no alternative (TINA).
Dividend update
  • Analog Devices updated investors on its capital allocation plans following its acquisition of Maxim Integrated in early September. The dividend policy has become more formalised with a free cash flow pay-out ratio of 40-60%. We forecast the company’s dividend growth to compound at over 10% over the coming years.
  • Accenture reported a strong set of fiscal fourth quarter results and increased its quarterly cash dividend by 10%. The company has a policy to grow the dividend in line with earnings and has guided to EPS growth of 13-16% next year. We assume that annual dividend growth can remain at the 10% level for the next couple of years at least.
  • The Board of McDonald’s declared a fourth quarter dividend of $1.38 per share representing a 7% increase over the previous quarterly dividend. This brings the quarterly dividend pay-out to over $1bn. This increase reflects confidence in their growth strategy. McDonald’s capital allocation policy is to return all free cash flow to shareholders over time through a combination of dividends and share repurchases.
  • IFF increased their quarterly dividend to $0.79. This is the twelfth consecutive year that IFF have increased their dividend. IFF currently yields ~2.1%.
  • UOB’s Board announced an interim dividend of S$0.60. The Monetary Authority of Singapore lifted the dividend cap on banks recently, allowing UOB to pay 60 cents, which compares favourably to last year’s interim of 39 cents, and the full year dividend of 78 cents. Banking regulators around the world are loosening restrictions on bank dividend payments. UOB currently yields 3.7%.
  • Hong Kong Exchanges increased their interim dividend by over 26% to HK$4.69 reflecting the strong growth in their business this year. The company has a dividend policy of paying out 90% of its earnings each year.
  • Bank OZK increased their quarterly dividend by ~5%, the forty-fourth consecutive quarterly dividend increase. Bank OZK yields ~2.8%.
  • Merck paid a quarterly dividend of $0.65, an increase of ~7% on last year. Merck pays out around 50% of its free cash flow as dividends and we expect FCF and the dividend to continue growing at this rate over the next few years.
Sustainability update
  • Caterpillar announced that it will begin to offer generator sets capable of operating on 100% hydrogen, including fully renewable green hydrogen, in late 2021. Caterpillar continues to make investments aimed at improving the capability of hydrogen-power solutions and replicating them across engine platforms as this fuel will likely play a role in customers’ plans for a reduced-carbon future.
  • Eaton announced that it is working with Microsoft to identify ways for data centres to integrate more renewable energy sources and support grid stabilization efforts by storing energy and providing energy services back to the grid. Data centres are at the heart of the digital economy but can also provide readily available, better means to support the grid.
  • Eaton has also announced that its Vehicle division has partnered with leading fuel system manufacturer Ballard Fuel Cell Systems and the US Department of Energy’s National Renewable Energy Laboratory to develop heavy-duty truck fuel cell technology. This builds on Eaton’s commitment to decarbonizing the transportation sector.
  • DSM announced that its four plants in Jiangsu province in China have joined the first batch of companies in the province to sign renewable energy power purchase agreements. The agreement puts all four sites on track to be powered by 100% renewable energy from 2022.
  • DSM also announced an acceleration of its initial 30% greenhouse gas emissions reduction target, to 50% by 2030. DSM was one of the first companies to align its efforts with the latest science presented in the IPCC Special Report ‘Global Warming of 1.5°C of 2019. As part of this effort, DSM signed power agreements in July, which mean that its North American electricity needs will be met by renewable generation from the end of this year.
  • Kering has taken the decision to stop using animal fur as of the Autumn 2022 fashion collections. In 2019 the company formalised and published a set of animal welfare standards that will continue as they concern other animal fibres and materials.
  • Schneider Electric received top ranking for performance in its sector by Vigeo Eiris, the principal European environmental, social and governance (ESG) rating agency and part of Moody’s Group. Earlier this year Schneider Electric was recognized as the world’s most sustainable corporation in 2021 by the Corporate Knights Global 100 Index. External validation is key to highlighting sustainability credentials.
  • Trane Technologies announced that Thermo King, its transport refrigeration unit, will deliver a fully electric product in every segment of the cold chain by 2023. The portfolio will include electric refrigeration solutions for truck, trailer, rail, air and marine transport. This will allow customers to transition to more sustainable solutions for their fleets.
  • Procter & Gamble announced a change in CEO with Jon Moeller succeeding David Taylor. We applaud the change, as the company have separated the CEO and Chairman roles. We believe the board should monitor how the executive manage the company relative to the interests of all stakeholders. Having the chairman of the board and the CEO as the same person can create a conflict of interest, and we vote against any such arrangement at shareholder meetings. David Taylor will stay on as Chairman.
  • Air Products, the industrial gases giant, and Cummins, the engine maker, announced plans to work together on accelerating the integration of hydrogen fuel cell trucks in the Americas, Europe, and Asia. Cummins will provide the hydrogen fuel cell electric powertrains, as Air Products begins the process of converting its global fleet of approximately 2,000 trucks to hydrogen fuel cell, zero-emissions vehicles. Air Products is a world leader in the supply and transport of hydrogen and sees hydrogen as the future for heavy duty segments of the transportation market.
Sense and sustainability

A multitude of factors contribute to producing a more sustainable planet. Here we identify a selection of core issues and the companies we invest in to help address them for the better.

Problem: how to make energy management more efficient and resilient to help reduce waste and accelerate the journey to net-zero carbon emissions.

Solution: Schneider’s EcoStruxure platform collects and analyses data and allows smart devices to make control decisions in buildings, plant and machines and on electricity grids. This technology allows customers to maximize energy efficiency and sustainability in their operations.

Sustainability credentials: Schneider has been ranked on the CDP “A-List” for 9 consecutive years thanks for its actions in cutting emissions, mitigating climate risks and contributing to the development of a low-carbon economy.
Problem: as electricity demand increases thank to 5G communication networks, data centres, electric vehicles etc the need for more sustainable solutions that consume less energy has been growing across all applications.

Solution: Analog Devices’ power semiconductors are central to this goal. Innovations around higher efficiency, smaller size, lower noise and better system intelligence will enable a more sustainable future. Power semiconductors can allow systems designers better control over power systems and help drive peak efficiency.

Sustainability credentials: Analog Devices is aiming for carbon neutrality by 2030 and expects its manufacturing sites to be using 100% renewable energy by 2025.
Problem: buildings consume >30% of the world’s energy and will be a key driver behind increased electricity consumption going forward. They are also a major contributor to CO2 emissions.

Solution: Eaton is focused on making electricity power work safely, efficiently, reliably and sustainably. Eaton’s “Buildings as a Grid” infrastructure combines local power generation, energy storage and intelligent control to allow customers to leverage existing energy infrastructure with a modular approach that can scale to meet changing energy needs. This will allow building owners to optimize their energy use, maximise their renewable energy consumption and sell excess energy back to the local utility.

Sustainability credentials: Eaton aim to cut their own carbon emissions by at least 50% by 2030 and achieve carbon neutrality at the same time. These targets have been approved by the Science Based Target Initiative (SBTi).
Problem: around one-third of the world’s food is lost or wasted during production or consumption. If food waste were a country it would be the third largest emitter of global greenhouse gas emissions worldwide, behind the United States and China.

Solutions: DSM offers multiple solutions to the food waste issue. Their “Pack-Age” cheese ripening product is moisture-permeable, breathable membrane that eliminates the need for an inedible crust. This avoids up to 10% of the cheese being lost and the increased packaging efficiency lowers the carbon footprint of cheese production. DSM’s antioxidants like vitamins C and E slow down the oxidation processes and extends the shelf-life and thus food spoilage of many foodstuffs. DSM’s “Hy-D” feed solution for poultry improves bird health and bone strength, including eggshells. This means fewer eggs being broken and thus wasted.

Sustainability credentials: DSM take sustainability so seriously that their business strategy is based in the Sustainable Development Goals (SDGs) agreed by the United Nations. DSM are proud that their name has assumed a new meaning in recent years: Doing Something Meaningful.

Problem: the consumer desire for natural ingredients can have the unintended consequence of depleting important natural resources.

Solution: IFF uses green chemistry to find novel waste-reduction methods and biotechnical innovations to create natural products from abundant raw materials, rather than deplete important resources such as food. One example is their terpene-based chemistry which utilizes a pine-based side product from the paper industry to create high-performance fragrance ingredients.

Sustainability credentials: IFF have Science Bases Targets initiative approved goals to reduce their absolute greenhouse gas emissions by 30% by 2025 (versus 2015 levels). They also have a Scope 3 goal to get their legacy suppliers representing 70% of their supply chain emissions to set targets and report annual emissions by 2025.
Problem: carbon-emission light companies such as consulting companies typically have low carbon footprints but should nonetheless play a role in environmental sustainability.

Solution: In January 2021 Accenture and Salesforce expanded their alliance to help companies embed sustainability into their business. Combining Accenture’s Sustainability Services, Salesforce Sustainability Cloud and Salesforce Customer 360 will bring sustainability to the front office and provide the C-suite with true visibility into their company’s historical and real-time ESG data. Companies will be able to track, measure and act on a range of sustainability initiatives, including reporting on carbon usage.

Sustainability credentials: Accenture have a 2025 target to reduce scope 1 and 2 greenhouse gas emissions by 65% from a 2016 baseline. They aim to procure 100% renewable energy in all locations by 2023 and by 2025 will require 90% of their key suppliers, representing three-quarters of their scope 3 emissions, to disclose their targets and actions.
Problem: banks hold the purse-strings, and many do not align their lending practices with environmental sustainability.

Solution: JP Morgan announced in October 2020 their commitment to align key sectors of their financing portfolio with the goals of the Paris Agreement. This means they are measuring the emissions of key clients in those sectors and setting reduction targets for these sector portfolios. To start they have set target to reduce the carbon intensity in their Oil & Gas, Electric Power and Auto Manufacturing portfolios by 2030.

Sustainability credentials: in addition to the financing actions above JP Morgan are targeting to finance and facilitate more than $2.5 trillion over 10 years to advance climate action and sustainable development.
Problem: understanding the carbon properties of 000’s of materials when making decisions on which to use, for example, in building projects.

Solution: in November 2019 Microsoft launched and hosted on Azure, their cloud offering, the free EC3 tool which reveals the embodied carbon in materials so architects, engineers, and contractors can make informed choices, selecting materials with the lowest carbon impact. There are now over 10,000 users of the EC2 tool and it has a global database of carbon data for almost 5,000 individual building products.

Sustainability credentials: Microsoft aim to be carbon negative by 2030 and says by 2050 they will remove from the atmosphere all the carbon dioxide they have emitted since they were founded in 1975.

Problem: the heating and cooling of buildings is estimated to contribute around 15% of global greenhouse gas emissions

Solution: Trane Technologies is uniquely positioned with innovative solutions to lead the movement in reducing buildings emissions. Trane have designed an electric unit to heat and cool building with no need for a separate fossil fuel powered boiler. If powered by renewable electricity this is a zero emissions solution.

Sustainability credentials: Trane is the first company in its sector to have their GHG emission targets verified by the Science Based Targets Initiative (SBTi).
Problem: Meeting net zero emission commitments will require ever greater commitments to renewable electricity.
Solution: SSE has a vision to be a leading energy company in a net zero world. The company has a science-based 2030 goal to cut by 60% the carbon intensity of electricity generated. SSE’s last coal plant ceased operation on 31st March 2020 and they are investing in new capacity to treble its renewable energy output by 2030 compared to a 2017/18 baseline.
Sustainability credentials: on the road to net zero in 2050, SSE has set four interim goals aligned to the UN’s SDGs for 2030. SSE aim to cut their carbon intensity by 60%, treble renewable energy output, help accommodate 10m electric vehicles and champion fair tax and a real living wage.
Problem: plastic pollution in our environment is a serious problem, especially when it ends up in our rivers and oceans.

Solution: Procter & Gamble has two key 2030 packaging design goals. One is to ensure that 100% of their packaging will be recyclable or reusable. An example here is working to move to recyclable formats for flexible films. The second goal is to reduce the use of virgin petroleum plastics in consumer packaging by 50%. Here P&G are continuing to lightweight packaging, increasing the use of recycled content, encouraging consumer conversion to more efficient product forms and where possible using alternative to plastics.

Sustainability credentials: P&G aims to purchase 100% renewable electricity globally and targets its manufacturing facilities to be carbon neutral over 2020-2030.
Problem: projections imply that the clothing industry will produce >60% more clothing by 2030 putting additional pressure on natural ecosystems.

Solution: Kering’s products often start on the farms, forests and fields. Examples include wool from the New Zealand highlands, cashmere from Mongolia’s South Gobi and organic cotton from India. Kering has supported the development of a Biodiversity Impact Tool which provides risk screening of potential biodiversity impacts from agricultural production which can, in turn, drive smarter sourcing decisions.

Sustainability credentials: Kering has committed to reduce its absolute GHG emissions in scopes 1 and 2 by 90% by 2030 from a 2015 base year. The company has also committed to increase its annual sourcing of renewable electricity form 25% in 2015 to 100% by 2022.
Explore the details
A high conviction portfolio that aims to deliver sustainable income and long-term capital appreciation through investing in dividend paying companies.

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Fund Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years’ performance is available in the fund factsheets.

The Fund has holdings which are denominated in currencies other than sterling and may be affected by movements in exchange rates. Consequently the value of an investment may rise or fall in line with the exchange rates.

Deemed authorised and regulated by the Financial Conduct Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website. (Notes 1, 3 and 4).

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