1

Claudia QuirozFund Manager

Cheviot Sustainable Investment

The Challenges of Constructing a Sustainability Fund

Whose Brains?

ESG Data and Intellectual Property

London Accord - Autumn ConferenceOctober 2010

What You Should Know Before We Start

• The Speaker – Claudia Quiroz

• 10 years of fund management experience

• Sustainable & Responsible investment specialist

• The Company – Cheviot Asset Management

• Largest independent asset manager

• AUM £3.2 billion*

• The Fund – Climate Assets Fund

• Launched March 2010

• Investment themes Climate Change Population Growth Resource Scarcity

2

CONVERGENCECONVERGENCE

ClimateClimate

PopulationPopulationResource Resource

ChangeChange

GrowthGrowthScarcityScarcity

EconomyNew

CONVERGENCECONVERGENCE

ClimateClimate

PopulationPopulationResource Resource

ChangeChange

GrowthGrowthScarcityScarcity

EconomyNew

Climate Asset Fund

* as at 30.09.10

Population – increase of 50% by 2050

Energy – increase demand of 50% by 2030

Food – increase of demand of 50% by 2030

Water – increase of demand of 30% by 2030

Challenges & Strategies of New Product Development

3

1. Analysing Industry & Competitors

4

2. Identifying the Product’s USPs

• Investment Strategy

– Multi- asset / Multi-thematic

– Reduce Volatility / Increase Liquidity

• Investment Process

– Top-down

– Bottom-up

• Capital Appreciation & Income

– Dividends from equities

– Interest Income from coupons

5

• Innovation

– The early adopter paradigm

• Track Record

– The new product dilemma

• Outperformance

– Past performance is not necessarily indicative of future performance

6

3. Understanding the Consumer’s Adoption Process

Why Should Investors Look At Sustainability Investing?

• Government Support

- Economic growth & job creation

• Growth

- High digits growth

• Consumer Preferences

- Makes economic sense

Source: HSBC estimates, government announcements, Cheviot

Thematic Allocation of Green Stimulus

(USD 512bn)

7

• “Fund” is no different from any other product

– General product development and marketing strategies

• Sustainability / Climate Change Investing is worth having

– Growth is key differentiator

• Consider the “Climate Assets Fund”

– Unique & innovative product

8

Key Takeaways

Disclaimer

• The information provided in this document are from sources that Cheviot considers reliable but Cheviot provides no guarantees as to the accuracy of this information. Information has been provided from different sources including: the International Energy Agency (www.iea.org), the Intergovernmental Panel on Climate Change (www.ipcc.ch) and the Food and Agriculture Organization (www.fao.org).

• The investment views reflect the current views of Cheviot's Sustainable Investment team which are subject to change. The investments or services mentioned in this document may not be suitable for all investors or be appropriate for their personal circumstances. If you are unsure as to whether the investments described in this document are suitable for you, we strongly recommend you seek professional advice from a financial adviser.

• Past performance is not necessarily indicative of future performance. The value of investments and the income derived from them may fluctuate and you may not receive back the amount originally invested. Currency movements may also affect the value of investments.

• Cheviot Asset Management Limited is authorised and regulated by the Financial Services Authority and is a member firm of the London Stock Exchange.