Notification of changes affecting the underlying fund of J76 Principal European Equity
17 Jun 2022
J76 Principal European Equity
We have been notified by Principal Global Investors (Ireland) Limited (“the Company”) that following a vote at an Extraordinary General Meeting held on 16 June 2022, the Company will be making changes to its Principal European Equity fund, which is the underlying fund to the above Affected Mirror Fund. The changes will take effect on or around 17 June 2022 (the “Effective Date”).
The directors of the underlying fund will be revising the investment strategy to incorporate environmental, social and governance ("ESG") considerations to reflect that the underlying fund will be classified as an ESG Orientated Fund. Additionally, the underlying fund will change name to Principal European Responsible Equity. In line with this, the Affected Mirror Fund name will also be amended to J76 Principal European Responsible Equity (USD) on the Effective Date.
Summary of changes
The underlying fund’s investment policy is being updated to incorporate an investment process that combines an assessment of ESG risks and associated positive change with a screening and exclusion framework. This will enable the underlying fund’s advisor to distinguish responsible investments as an investment focus, in order to facilitate the underlying fund becoming an ESG Orientated Fund. The underlying fund will also have a particular focus on companies demonstrating a commitment to strong corporate governance practices.
The investment strategy will be updated to state that the ESG considerations the underlying fund is adopting will be incorporated through taking greenhouse gas emissions, carbon footprint, public health, health and safety and workforce and community management into account as environmental and social considerations in the underlying fund’s investment process.
In addition, the underlying fund’s investment policy is being amended to clarify that the adviser seeks to achieve the investment objective through investing in equity securities, such as shares, of companies domiciled or with their core business in Europe (including Eastern Europe) that demonstrate positive fundamental change at attractive valuations relative to other similar investments while meeting the specified ESG considerations.
As a result of ESG considerations and screening, it is expected that the size of the investment universe of the underlying fund will be reduced by 20% or more in terms of number of potential investee companies. The underlying fund will also be subject to additional risk factors associated with ESG investments.
Please refer to the Appendix opposite for full details of the changes specified by the Company.
Apart from the changes set out in the Appendix, there are no changes in the operation and/or manner in which the underlying fund is being managed, and there are no implications on the features and risks applicable to the underlying fund.
We have contacted policyholders and their financial advisers to notify them of the changes; a sample of which can also be found opposite.
Should you have any questions regarding these changes, please contact the Investment Marketing Team.