Nucleus Wealth Responsible Investing Disclaimer

Sustainability-Related Statements

Table 1 – General Terms
Term Definition
Ethical Screens Categories of a variety of ethical filters which investors may apply to exclude companies operating in or profit from those areas or industries which do not align with the investor’s own ethical framework.
Ethical Tilts Rules which the investor can apply to their investment strategy to focus more of their investment on companies which align with their own ethical framework.

Methodology for Integrating Sustainability-Related Considerations

Nucleus Wealth differentiates itself by offering investors a system of investment that is personalisable, transparent, and safe.

Rather than dictating the ethical framework under which investors are required to operate, Nucleus Wealth’s approach accepts that individual investors may reject or accept various ESG-related sectors and activities for varying reasons that are much more nuanced than they are black-and-white.

Nucleus Wealth provides investors with a range of ‘screens’ and ‘tilts’ which can be applied to an investor’s portfolio either to exclude companies operating or benefitting from industries or practices or focus greater parts of their investments towards strategies and sectors. By applying screens and tilts, investors can tailor their investment approach in a manner that best aligns with their ethical preferences.

Once the portfolio has been customised to suit the investor’s needs, Nucleus Wealth provides the investor with a company profile, access to detailed performance dashboards and monthly performance reports to ensure the investor is well-informed as to the relevance of the company’s inclusion in their portfolio.

Nucleus Wealth considers itself to be ethical including instilled integrity, honesty, and reliability within its operations. From an investment standpoint, investors may choose from over 30 different ethical overlays over their portfolio so that Nucleus Wealth do not purchase stocks that conflict with an investor’s beliefs.

Table 2 - Nucleus Wealth's screens list
Activity Revenue Materiality
Climate Change
No Fossil Fuels (Worst Offenders)Removes the worst polluters, in particular, companies that use lignite coal or create oil from tar sands
No Fossil Fuels (Any)Removes companies where more than 10% of the company is involved in coal, oil or gas
No Coal Seam Gas or FrackingRemoves companies who are involved in coal seam gas extraction and fracking
No Nuclear PowerRemoves companies with nuclear power stations or producers of uranium
No Old Growth Forest LoggingRemove companies that are involved with logging old growth forests
War
No Arms (Worst Offenders)Removes companies that are known to produce cluster munitions and landmines
No Arms (Any)Removes companies that are known to directly produce weapons or ammunition
No Nuclear WeaponsRemoves companies that are known to produce nuclear weapons
Human Rights
No Undemocratic CountriesRemoves companies from countries that score below 7 on the Democracy Index (from the Economist Intelligence Unit). Note this category removes some countries that are rated as Flawed Democracies like Singapore, Hong Kong or Brazil. Also removes companies where more than 20% of the company is owned by a government organisation from a country that rates below 7.
No Morally Repressed Countries (Worst Offenders)Removes companies from countries that rate Insufficient Moral Freedom or below as assessed by the World Index of Moral Freedom. Note this category removes countries like Singapore, South Korea or China. Also removes companies where more than 20% of the company is owned by a government organisation from a country that has low or very low moral freedom. Religious freedom, bioethical freedom, drugs freedom, sexual freedom, and family and gender freedom are assessed.
No Morally Repressed Countries (Any)Removes companies from countries that score below High Moral Freedom on the World Index of Moral Freedom. Note this category removes countries like Japan, Singapore, South Korea or China. Also removes companies where more than 20% of the company is owned by a government organisation from a country that rates poorly
No Immigration DetentionRemoves companies involved in immigration detention centres
No JailsRemoves companies involved in running jails
Lack of Gender Diversity (Worst Offenders)Removes companies that have less than 10% of their board or board + top 5 executives being female. Note: This will remove many Japanese stocks from your portfolio
Lack of Gender DiversityRemoves companies that have less than 20% of their board or board + top 5 executives being female. Note: This will remove many Japanese stocks from your portfolio
Health
No Fast FoodRemoves companies that produce products with significant amounts of sugar (for example Coca Cola) or operate fast food restaurants.
No Genetically Modified Foods Remove companies that grow food using genetically modified organisms
Vices
No GamblingRemoves companies that have more than 5% of sales from gambling
No AlcoholRemoves producers of alcohol
No PornographyRemoves companies where pornography comprises more than 5% of revenue
No TobaccoRemoves companies that manufacture tobacco products
No CannabisRemoves companies that produce cannabis products
Animal Rights
No Fur or Specialty LeatherRemoves companies that are known to produce fur or specialty leather
No Animal Testing (Any)Removes companies that test products on animals according to Peta. Note: This will remove many healthcare companies who are mandated by law to test on animals. Healthcare makes up a relatively large proportion of our portfolios.
No Animal Testing (Worst Offenders)Removes companies that test products on animals for non medical purposes
Religion
No ContraceptionRemoves companies that manufacture contraceptive products
Only Sharia / IslamicConfines your investment to companies within the MSCI AC World Islamic index
No Human Stem Cell UseRemoves companies that are known to use human stem cells or fetal tissue research
Social
No Australian tax dodgersRemoves companies that are in the Michael West top 40 tax dodgers. This is a list of companies who are most aggressive both in paying little or no tax on their profits (or more precisely: taxable income) but also in deliberately wiping out their profits in Australia (offshoring it to low tax jurisdictions).
No Economically Repressed Countries (Worst Offenders)Removes companies from countries that rate either Repressed or Mostly Unfree as assessed by the Index of Economic Freedom (Wall Street Journal and the Heritage Foundation). Also removes companies where more than 20% of the company is owned by a government organisation from a country that is Repressed or Mostly Unfree.
No Economically Repressed Countries (Any)Removes companies from countries that are not either Free or Mostly Free as assessed by the Index of Economic Freedom (Wall Street Journal and the Heritage Foundation). Note that this category removes many European countries like Spain or France - the Worst Offenders version does not. Also removes companies where more than 20% of the company is owned by a government organisation from a country that is Not Free or Mostly Free.
Asset Class
No Australian SharesRemoves all Australian listed shares from the portfolio
No International StocksRemoves companies from countries that are not listed on the Australian Stock Exchange
No Government BondsRemoves all government bonds from the portfolio
No Foreign CashRemoves all foreign exchange cash positions from the portfolio
Thematic
No Australian BanksRemoves Australian banks from the portfolio
Limit Australian Housing ExposureRemove any property developers, REITs, Australian banks, housing related consumer discretionary
No GICS sector Communication ServicesRemoves companies from the GICS sector: Communication Services
No GICS sector Consumer DiscretionaryRemoves companies from the GICS sector: Consumer Discretionary
No GICS sector Consumer StaplesRemoves companies from the GICS sector: Consumer Staples
No GICS sector EnergyRemoves companies from the GICS sector: Energy
No GICS sector FinancialsRemoves companies from the GICS sector: Financials
No GICS sector Health CareRemoves companies from the GICS sector: Health Care
No GICS sector IndustrialsRemoves companies from the GICS sector: Industrials
No GICS sector Information TechnologyRemoves companies from the GICS sector: Information Technology
No GICS sector MaterialsRemoves companies from the GICS sector: Materials
No GICS sector Real EstateRemoves companies from the GICS sector: Real Estate
No GICS sector UtilitiesRemoves companies from the GICS sector: Utilities
No GICS Industry Group TransportationRemoves companies from the GICS Industry Group: Transportation
Table 2 - Nucleus Wealth's tilts list
Activity Revenue Materiality
Investment Style Factors
Quality StocksThis is a rules based approach to choosing stocks that rate well on quality metrics. We rate quality stocks on a variety of measures that include lower levels of debt, higher margins, lower volatility of earnings and a higher return on invested capital. We target 12 of the largest stocks globally, provided that they are listed in a developed market
Value StocksThis is a rules based approach to choosing stocks that rate more cheaply on valuation measures. We rate value stocks on a variety of valuation measures including value vs the broader market, value vs peer and value vs historical ranges. Cashflow valuations have the largest influence, then income valuations and finally balance sheet. We target 12 of the largest stocks globally, provided that they are listed in a developed market
Growth StocksThis is a rules based approach to choosing growth stocks. We rate value stocks on a variety of growth measures across both cashflow and income. We also look at both historical and forecast growth. We target 12 of the largest stocks globally, provided that they are listed in a developed market
DefensivesThis is a rules based approach to choosing stocks that primarily defensive in terms of share price and earnings. They typically include telecommunications, real estate and utilities. We target 12 of the largest stocks globally, provided that they are listed in a developed market
Climate Change
Battery Supply ChainThis is a rules based approach to choosing stocks that are involved in battery materials. We target 6 of the largest global stocks involved in either manufacturing batteries or that produce commodities primarily used in batteries. We typically choose companies listed in developed markets
Clean EnergyThis is a rules based approach to choosing clean energy stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Nuclear PowerThis is a rules based approach to choosing nuclear power stocks. This includes both energy utilities and uranium producers. We target 6 of the largest stocks globally, provided that they are listed in a developed market
Technology
Large Technology StocksThis is a rules based approach to choosing technology stocks. We target 6 of the largest stocks globally, provided that they are listed in a developed market
Cloud Computing StocksThis is a rules based approach to choosing stocks that are involved in cloud computing. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Artificial IntelligenceThis is a rules based approach to choosing artificial intelligence stocks. It includes companies who produce these products or provide ancillary services that will benefit from the growth of this sector. We target 8 of the largest stocks globally, provided that they are listed in a developed market
CybersecurityThis is a rules based approach to choosing cybersecurity stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
RoboticsThis is a rules based approach to choosing robotics stocks. It includes companies who produce these products or provide ancillary services that will benefit from the growth of this sector. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Consumption
Video GamingThis is a rules based approach to choosing video gaming stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Luxury GoodsThis is a rules based approach to choosing luxury goods stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
TravelThis is a rules based approach to choosing travel stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed marke
LogisticsThis is a rules based approach to choosing logistics stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Commodities
Oil & Gas StocksThis is a rules based approach to choosing oil & gas stocks. We target 6 of the largest stocks globally, provided that they are listed in a developed market
Gold StocksThis is a rules based approach to choosing gold stocks. We target 6 of the largest stocks globally, provided that they are listed in a developed market
Gold (physical, unhedged)This is an exposure to a gold ETF investing in physical gold.
Gold (physical, hedged to AUD)This is an exposure to a gold ETF investing in physical gold hedged in Australian dollars.
AgribusinessThis is a rules based approach to choosing agribusiness stocks. Companies will be a mix of farm equipment, fertilizer and seed producers. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Health
Weight Loss Drug ProducersThis is a rules based approach to choosing stocks that have active weight loss or obesity drugs. We currently target Eli Lilly and Novo Nordisk. We may add more stocks if they have drugs approved.
Military
Defense ContractorsThis is a rules based approach to choosing defense contractor stocks. These are companies that are involved in the manufacture of weaponry. We target 8 of the largest stocks globally, provided that they are listed in a developed market
GICS Sectors
Global Consumer DiscretionaryThis is a rules based approach to choosing consumer discretionary stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global Consumer StaplesThis is a rules based approach to choosing consumer staples stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global Communication ServicesThis is a rules based approach to choosing communication services stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global EnergyThis is a rules based approach to choosing energy stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global MaterialsThis is a rules based approach to choosing materials stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global IndustrialsThis is a rules based approach to choosing industrial stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global FinancialsThis is a rules based approach to choosing financial stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global Health CareThis is a rules based approach to choosing healthcare stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global Information TechnologyThis is a rules based approach to choosing information technology stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global Real EstateThis is a rules based approach to choosing real estate stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
Global UtilitiesThis is a rules based approach to choosing utility stocks. We target 8 of the largest stocks globally, provided that they are listed in a developed market
// //