The 6 megatrends shaping Australia’s sustainable investment market.Identified by SEER Asset Management

November 2018

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Seer Asset Management Information Memorandum

Our experienced and small team recognises that some investors are seeking opportunities to be part of something that could change our world for the better.

So, we have developed the Seer Mega Trends Fund, an Australian wholesale managed fund that intends to invest in listed companies across the world that are embracing the change arising from these trends.

We believe investors want to invest in investment funds that apply strong governance policies and procedures, with investment managers that understand strong quantitative research and evaluate the quality of companies before investing in them.

We believe investors also want to invest with investment managers that employ financial and investment professionals to analyse opportunities and manage assets, integrate a philosophy and report on investment performance.

We take an active engagement approach to investing. We’ll engage with companies and other stakeholders to generate additional insights into a company’s practices and issues.

We believe investors also want investment managers to influence the companies they invest in, for example by influencing corporate management to improve performance, the direction of future company policy to promote sustainable development or to create favourable operational environments.

SEER understands the importance of transparency. So, we produce an annual impact report which measures, calculates and reports on the extent (if any) of positive social and environmental impact arising from the investment strategy.

We want to engage with investors like you and give you the information that enhances your understanding of the investments we make and the potential risks of investing in the Seer Mega Trends Fund (including derivatives risk, liquidity risk and portfolio concentration risk). Neither the return of income or capital is guaranteed.

Let’s explore the 6 mega trends investors need to know about before investing in the Seer Mega Trends Fund and learn more about the two specialist investment approaches we include in our process.

Who is SEER?

Our company name Seer means ‘one that predicts events or developments’

We’re a funds management group and a positive impact investor focused on opportunities created by 6 mega trends and a sustainable economy.

SEER is a diversified funds management group specialising in global equities and sustainable investment strategies.

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Seer Asset Management Information Memorandum

Investors like you may expect investments to be integrated into a wider process, with the aim of not just earning a financial return. You may also expect a return that aims to offer better environmental, social and ethical concerns along with an investment that intends to focus on trends that seek positive change through science, technology and innovation.

You may understand the mega trends we believe are shaping our future.

You may have a clear expectation that businesses will go beyond aiming to maximise return to shareholders.

You may want investments that deliver positive social and environmental impact alongside a financial return.

You may want greater accessibility, transparency and accountability.

And you may want to be part of something that aims to have a positive impact on our economy and environment.

You may be one of a growing number of Australians seeking out socially responsible investments.

We believe more funds are being channelled into socially responsible investing funds in Australia and Zealand than ever before, and around the world.

It presents an opportunity to unite investors with new investment opportunities.

Responsible Investment Association Australia reveals that $6 billion of capital is now being put to work to deliver more socially responsible financial returns for investors. We believe these investments also benefit the environment and could impact the lives of tens of thousands of people including improved employment pathways, education and health services.

The social investment market was $64.9 billion, or 4.5% of professionally managed assets in Australia by December 2016, according to figures from the Australian Centre for Financial Studies.

The majority of Australia’s largest superannuation funds have made some form of public commitment to responsible investing, while about half have in place dedicated socially responsible investing options.

SEER is solely focused on socially responsible investing. We are a diversified funds management group specialising in global equities and sustainable investment strategies. Put simply, we guide investors through the often-complex process of socially responsible investing.

We recognise that investors may want to channel their investments into projects that aim to bring about positive change for our world.

We’ve explored the megatrends that we believe will critically shape the future of socially responsible investment to help you make socially responsible investment decisions.

We look forward to helping you invest in a more socially responsible way

Introduction

A new breed of socially responsible investors have changed what it means for them to invest.

Alice LeMessurier Executive director and Head of Investments SEER Asset Management

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Seer Asset Management Information Memorandum

By 2030, 60% of the world’s population will be middle class and 80% of that middle class will reside in development regions. As overall global population increases combined with economic development, we believe we will see more consumers as well as consumption patterns improving in line with growing wealth.

Global literacy rates are better than ever. Slowly but surely, the status of women has improved in the last couple of decades (though we still have a long way to go as a nation).

There’s also been advances in global education. Access to good quality healthcare is improving considerably. We’re living longer, and expect great things from our lives, too.

We want amazing experiences. Great holidays. Perfectly curated social media pages that showcase our lifestyle and connections.

The focus on individual empowerment does create challenges to government structures and processes. However, it also presents significant development and social advancement.

The rise of the individual extends to the workplace, too. There is a focus on the gender pay gap here in Australia, along with inequality and unconscious bias in the workplace.

Companies face many challenges, but a we believe a more recent challenge is understanding that employees want a lot more than just a wage from their jobs. And because people are living longer, they’re working longer, too. These ageing employees are making workplaces smarter.

We believe the power of individuals in the workplace has never been greater, putting new pressures on human resources teams. Rewards programs, improving employee engagement and maintaining acceptable staff retention rates are paramount in business, regardless of the employee’s age.

We’re more opinionated, too. And we’re not afraid to share those opinions, particularly on social media.

We’re more socially aware, more careful consumers and better informed than any other time in history.

We believe the rise of the individual puts a new focus on investment opportunities. Figuring out what individuals want from their life and delivering that is the challenge for companies.

We aim to invest in companies that make a positive impact on this mega trend, for example by promoting responsible corporate practice, equal opportunities, or advancement of education.

Megatrend 1 The rise of the individual

We believe individual empowerment fuelled by increasing prosperity, greater educational opportunities and the technological revolution is upon us. Today, it’s all about you.

We’re more socially aware, more careful consumers and better informed than any other time in history.

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The sector is being transformed by technology, and some healthcare jobs are expected to cease to exist in the future.

At the same time, we’re living longer and will require more specialist care. While healthcare has been the top sector for new jobs since the 1990s, we believe opportunities in this market are expected to increase.

Healthcare and social assistance jobs are projected to grow a further 16.1% over the next five years, according to figures from the Department of Jobs and Small Business report.

We believe the jobs growth won’t just be in hospitals, but in other specialist niches as well. Meanwhile, the fastest growing segment of world population is the 65+ age group.

We believe new technologies will dominate health research agendas and will also influence product and service development to assist the elderly to live longer and more independently.

The jobs of the future in healthcare will require extensive training. Predictions suggest that DNA analysts and home aid professionals will be required in the future, among other emerging healthcare roles.

The merging of technology and healthcare has seen an exponential increase in healthcare innovations, where we believe numerous investment opportunities lie.

Blockchain, hardware innovations, neuro-technologies, nanotechnology, nanomaterials, food printing, synthetic biology and a range of other innovations are giving us access to better healthcare than ever before.

Medical cannabis was recently legalised in Australia, opening up a number of new investment opportunities in small stock companies pushing forward with new research in this field.

We believe healthcare has a lot of potential for investment opportunities.

Megatrend 2

Healthcare

Australia’s healthcare system is among the best in the world.

The healthcare industry is Australia’s biggest employer and is growing, accounting for 13.7% of the entire workforce, as of February 2018.

The merging of technology and healthcare has seen an exponential increase in healthcare innovations, where numerous investment opportunities lie.

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Seer Asset Management Information Memorandum

According to the Australian Productivity Commission, real agricultural output has more than doubled over the last four decades, while agricultural exports have tripled.

By 2050, demand for agricultural products and food will increase by 35% and water by 40%.

New technologies and methods are expected to help increase land productivity and adaptation to environmental changes. Technology improvements will also better monitor groundwater and see a new generation of opportunities with wastewater treatment plants.

More than half of the world’s population live in urban areas and almost all of the new growth will take place in lesser known medium-sized cities of developing countries.

But as the world becomes more populated and urbanised, demand for energy, food and water will rise.

New technologies will also play a central role in adapting agricultural practices to climate change and more extreme weather-related conditions.

Improvements in irrigation technologies and new agricultural practices should help monitor wear use and slow groundwater depletion.

Australia’s rural industries will be impacted by significant change at global, national and local levels over the coming decades.

We believe this will create both opportunities and challenges for small and large farm businesses.

It will also impact rural lifestyles, agricultural landscapes and our broader society and economy.

Particularly in light of the long-running drought in Australia, water is under constant assessment to look for better frameworks for future water policy and management decisions.

We believe the investment opportunities in this space are significant.

Megatrend 3

Agriculture, water, food

We live in a hungrier, wealthier, more selective world with greater access to technology.

We’re witnessing significant innovations in agricultural production systems, supply chains and governance in the agricultural sector.

Australia’s rural industries will be impacted by significant change at global, national and local levels over the coming decades.

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Major oil companies are now actively talking about the transition to a low-carbon economy. Others outside the traditional energy sector are also interested in alternative energy sources, creating opportunities for new players to enter a fast-growing market.

In fact, 2017 was the biggest year for the industry since the iconic Snowy Hydro Scheme was finished more than half a century ago.

The Clean Energy Regulator announced that there are enough projects now committed to meet the 2020 Renewable Energy Target.

Renewable energy represents the lowest cost type of new energy generation that can be built, making wind and solar attractive investment opportunities.

The unprecedented program of works is reducing household power bills by hundreds of dollars every year.

The heat is also on Australia’s coal-fired power stations as temperatures rise and there is an increased focus on global warming.

Renewable energy is produced using natural resources that are constantly replaced and never run out.

There are many renewable energy technologies. Solar is one of the best known, wind power is one of the most widespread and hydropower is one of the oldest. Other renewable technologies harness geothermal energy, bioenergy or ocean energy to produce heat or electricity.

Australia has access to a range of renewable energy sources. A study by Energy Strategies for the Clean Energy Future Group shows that renewable energy could supply more than half of the country’s electricity by 2040, reducing CO² emissions from electricity generation by nearly 80%.

In the longer term, renewable energy could supply 100% of grid electricity in Australia.

We believe the renewable energy sector will grow in the coming years in Australia.

Megatrend 4

Energy

By 2050, demand for energy will rise by 50%. New R&D will improve monitoring, management and efficient productivity of natural resources to meet growing population and demand.

There will be substantial growth in alternative energy.

Renewable energy is produced using natural resources that are constantly replaced and never run out.

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It refers to the fact that the world is much more connected through trade, movements in capital, travel and information.

The driving forces behind globalisation is the liberalisation of global trade and financial markets. It’s also cheaper to communicate and transport than ever before, due to a range of technical innovations.

We believe globalisation will continue to facilitate and deepen the wide diffusion of intelligence and new markets and industries through science, technology and innovation presenting opportunities in business R&D, value chain specialisation and concentration, business standards and workforce mobility.

We believe globalisation will also facilitate the wide diffusion of knowledge, technologies, and new business practices. Digital technologies will increasingly help ease the strains of mobility, enabling individuals to maintain regular contact with friends and families, for example.

The essential drivers of globalisation have been strong growth in global trade.

Globalisation has impacted communities across the globe. Fuelled by fast-paced changes in technology and the increased mobility of goods, services, capital and labour, globalisation is changing entire economies, societies and the natural environment. Our world is also more interconnected than ever before.

We believe globalisation presents a wealth of opportunities. There is increased economic interdependence, shifts in production, rapid advances in technology but also the impacts of climate change. Global agreements will play a key role in strengthening the benefits of globalisation.

Globalisation has also had an impact on the quality of life for all of us. There has been an improvement in standard of living through improved roads and transportation, improved health care, education and the global expansion of corporations.

However, globalisation has had a negative impact on people in developing nations, with manufacturing operations shifting to poorer counties where costs are cheaper, presenting a number of sustainability challenges to navigate.

We believe we need to understand this mega trend well to ensure we are investing in the most sustainable areas.

Megatrend 5

Globalisation

Globalisation is a term that refers to the process of increasingly intensive global interactions in economic, political, ecological and cultural activities.

Globalisation will facilitate the wide diffusion of knowledge, technologies, and new business practices. But with it comes sustainability challenges.

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Seer Asset Management Information Memorandum

Disruptive technology a sign of advancement. And it’s becoming more frequent than ever before.

Consider this. Airbnb is the world’s largest accommodation provider, but doesn’t own property. Facebook is the world’s largest media company, but generates no content. And Uber is the largest taxi company, but owns no cars.

Some of the technologies identified as having the potential to transform life, business and the global economy include renewable technology, mobile internet, cloud technology, the internet of things and 3D printing.

The contribution of digital technologies to Australia’s economy is forecast to grow 75% to $139 billion by 2020, according to Deloitte Access Economics figures.

Innovation has become a critical element for growth for organisations. According to Gartner, almost 60% of CEOs globally identify innovation, in particular digital innovation, as the main strategic focus for 2018.

The explosion in disruptive technology is changing behaviour and expectations as much as the tools used to deliver new services and experiences.

On the back of this, we believe Australia is transitioning from a resources-heavy provider to a service-based economy. We’re driving disruptive technology development and applications across multiple sectors, including advanced manufacturing, agriculture, services, health, infrastructure, resources and energy.

We believe this presents a number of opportunities and challenges that socially responsible investors may need help to navigate.

Megatrend 6

Disruptive technology

A disruptive technology displaces an established technology and shakes up the industry to create a completely new one.

The explosion in disruptive technology is changing behaviour and expectations as much as the tools used to deliver new services and experiences.

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Seer Asset Management Information Memorandum

In fact, science, technology and innovations could improve the monitoring and management of our natural resources and contribute to economic growth.

We believe fostering access to these sectors and encouraging innovation is important for the country’s leaders and national and international polices will have a big impact on this space.

We believe focusing on science, technology and innovation is also an opportunity. These areas are continually evolving, influenced by structural shifts in the global economy.

There are a number of forces continuously shaping this space. For example, improved globalisation of shared innovative ideas, new entrants to the market as well as slower moving forces such as structural changes to the world economy.

Our nation is in a good position to be innovators, but we lag behind other nations in the amount we invest in innovation, and in the level of our ambition, according to a report by Innovation and Science Australia.

There is a keen focus on innovation shaping new opportunities in Australia by 2030.

We believe the nation needs to find new sources of growth and improve productivity to maintain our standard of living, particularly given that the resources investment boom is easing and an ageing population is a concern.

The biggest growth opportunities will come from knowledge-intensive companies that innovate and export as they are the most profitable, competitive and productive, the report found.

We recognise the evolving nature of science, technology and innovation and believe we will find real investment opportunities for our clients within the 6 mega trends we’ve identified as shaping the future.

Science, technology and innovation, is where we will find solutions to the mega trends

Science, technology and innovation can play a critical role in the nation’s future.

It can improve economic growth, overall health and wellbeing, renewable energy and result in improved agricultural technologies, to name a few.

Focusing on science, technology and innovation is also an opportunity. These areas are continually evolving, influenced by structural shifts in the global economy.

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Within our investment philosophy is our specialist multi-thematic approach, supported by two key processes within the investment making decisions. These are our integrated sustainable, responsible and impact reporting, plus our active company engagement.

Sustainable, responsible and impact investing We use sustainable, responsible and impact investing because we want to consider the impact a business’ environmental, social and corporate governance (ESG) criteria has on generating long-term competitive financial returns and positive societal impact for investors.

Sustainable and responsible investing means seeking out companies engaged in social justice, environmental sustainability and alternative, clean technologies.

We want to invest in businesses that focus not just on the financials and the economic environment but also focus on how their operations could create a better society and address ‘social trends’ that are evolving to develop a better world in which we all live.

For example, in a world with a growing global population, such ‘social trends’ could include society’s growing demand for better air quality, water supply management, efficient energy production, quality agricultural produce and facilitation of workforce equality and mobility including better business standards and ethics.

We believe that ESG issues can have a material impact on the future success and profitability of business. This is why we have incorporated ESG issues at all stages of analysis.

Sustainable investors like us aim for strong financial performance, but also believe that these investments should be used to contribute to advancements in social, environmental and governance practices.

We actively seek out investments – such as community projects or clean technology projects that we believe are more likely to provide important societal or environmental benefits.

And we hope the day will come when socially responsible and impact investing just becomes investing.

Active engagementOnce the Seer Global Mega Trends Fund invests in a company, we approach our investment as a partnership with the company. We review each company regularly and actively manage those investments that do not meet with our expectation.

SEER through the investment life engages directly with companies and other stakeholders to generate additional insights into company practices and issues. We also aim to exercise influence in order to improve corporate management and performance, or the direction of future policy to promote sustainable development and to create favourable operating environments for the companies in which we invest.

Our specialist research investment practices

The Seer Mega Trend Fund’s investment strategy is focused on the 6 mega trends, sustainability, growth, quality and valuation. Individual stocks are selected through a “bottom-up” stock-by-stock fundamental and rigorous research process.

Common themes for sustainable and responsible investing include seeking out companies engaged in social justice, environmental sustainability and alternative, clean technologies.

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Seer Asset Management Information Memorandum

Seer Asset Management Limited (ACN 622 483 041, CAR 001264876) (Seer, we or us), a corporate authorised representative of LeMessurier Securities Pty Ltd (ACN 111 931 849, AFSL 296877), is the investment manager for the Seer Innovation and Positive Impact Fund (Fund) and has prepared this information. AMAL Trustees Pty Limited (ABN 98 609 737 064, AFSL 483459) (Trustee), is the trustee for the Fund and the issuer of units in the Fund.

This information refers to investments in the Fund. Investments in the Fund are offered under the terms of an information memorandum (Information Memorandum) which is available from us. Any person wishing to invest in the Fund should review the Information Memorandum in full and seek legal, financial and taxation advice before making an investment decision. Applications can only be made on the basis of an application form attached to the current Information Memorandum. This information is not designed to provide personal financial product advice to any person. No aspect of this information takes into account the objectives, financial situation, or needs of any person.

This information is intended only for wholesale clients within the meaning of s761G and s761GA of the Corporations Act 2001 (Cth) and must not be forwarded or otherwise made available to anyone who is not a wholesale client. Only investors who are wholesale clients may invest in the Fund.

The Fund is a newly established unregistered managed investment scheme with no performance history. An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment. Neither capital nor returns are guaranteed. Any opinions, forecasts, estimates or projections reflect our judgment at the date this information was prepared, and are subject to change without notice. Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct. Actual returns could differ significantly from any forecasts, estimates or projections provided.

Seer has obtained information from sources it considers to be reliable, but neither Seer nor the Trustee represent that such information is accurate or complete, or that it should be relied upon. Nether Seer nor the Trustee makes any representations or warranties, express or implied, as to the accuracy or completeness of the information and to the maximum extent permitted by law, neither Seer nor the Trustee, nor their directors, employees or agents accept any liability for any loss arising in relation to this information.

We take reasonable care in the preparation of this information. However, all obligations which might otherwise be implied or imposed on us by law or equity are in relation to this information are expressly excluded to the extent permitted by law. Under no circumstances will Seer or the Trustee be liable for any special or consequential damages.

This information may not be reproduced, distributed or transmitted by any means, in whole or in part, without the written permission of Seer.

Important notice

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Invest with us

Seer is a funds management group specialising in the global equities, the 6 megatrends and sustainable investment strategies.

Get in touch to find out moreLevel 3, 17 Castlereagh Street Sydney, NSW 2000 Local: 1300 140 546 International: +61 2 8278 9541 Email: hello@seeram.com.au