Our key stock selection instrument are the close contacts we have built up over the past 20 years with company managements. Every year, we hold more than 600 meetings with executive bodies of our portfolio companies to discuss the previously analysed financial and non-financial ESG aspects and to penetrate business models, corporate strategy and key value drivers. We also gain insight into factors such as product quality, customer and supply chains, market structures and market entry barriers which in turn enhances our understanding of the companies.

In addition to these on-site meetings, valuable research information is also obtained from other sources. The fundamental data needed for our screening, portfolio and reporting models, for instance, is procured from various external research providers (brokers) and high-quality data feeds (Bloomberg and FactSet). External ESG data is obtained from MSCI is one of our main sources of external ESG data.

In order to single out first-rate companies that qualify for the portfolio, our managers seek out fundamental, long-term value drivers such as excellent sustainability ratios, steady business sector growth, changing trends in business models, mispricing, or restructuring efforts. The next step is to analyse and filter these ideas more closely with the help of valuation techniques that use an income-based approach (DCF models, multiple valuation, peer group analyses) or intrinsic value methods (analysis of balance sheet quality). An analysis of how well companies have integrated the individual ESG criteria into their business models is also a decisive factor for the fund’s investment strategy.

Some 40 stocks are eventually selected for CHOM’s top quality portfolio on the basis of the business model evaluation and further talks with senior company representatives. Each equity selected for the portfolio is initially given an equal weighting to ensure that it has a significant influence on results.