Portfolio management

The investment process adopted by the Mediobanca's Private Banking Division applicable to individual portfolio management, allows, through the delegated manager, sustainability risks to be integrated by implementing an approach that combines:

• Negative screening: implemented through the use of exclusion criteria designed to ensure that shares and bonds issued by the following are not included in the investable universe: companies involved in specific activities or particular sectors; companies directly or significantly linked to production and/or marketing of weapons that violate fundamental humanitarian principles (e.g. cluster and fragmentation bombs, bombs containing depleted uranium, anti-personnel landmines, nuclear weapons, chemical and bacteriological weapons, etc.); 
• Positive screening: implemented through the assessment of ESG criteria in addition to the traditional aspects taken into consideration in the investment selection process. 

These criteria are aimed at promoting investment in instruments issued by companies and investment funds with high ESG ratings that have not been involved in serious issues. These criteria are implemented through the introduction of specific limits on investment in funds and financial instruments with low ESG ratings, for which no ESG rating is available, or in companies involved in very serious issues (companies for which corporate problems have materialized or are materializing, with possible negative impact for the company in earnings and reputational terms).

This approach aims to improve the overall risk/return assessment of the clients’ portfolios in the long term by taking ESG criteria among others into account.

Mediobanca has integrated factors that could impact on the sustainability risks of the portfolios it manages into the individual portfolio management investment process. In particular, through its delegated manager, the Bank has adopted a system for assessing and monitoring environmental, social and governance aspects as well as the sustainability risk of issuers and CIUs. The aim is to assess possible adverse impact on the financial return of an investment.

The Bank, through the delegated manager, adopts a methodology that combines qualitative and quantitative criteria. It is based on the same positive screening criteria described above and allows the sustainability risk for each managed portfolio to be assessed, along with any adverse impact on the return caused by related events.

A "sustainability score" attributed to each managed portfolio, is assigned with values which varies from 0 (minimum risk) to 5 (maximum risk) to each of which corresponds. A score which can assume one of the following values: Low, Limited, Medium, Relevant or High. When the assessment is “Low”, there is a minimal chance of an event that could affect the sustainability risk or have any adverse impact on it occurring. When the assessment is “High”, the chances of it occurring are very high. This information is provided to the Client within Annex 1 to the contractual inormation set of the management lines. 

It should also be noted that, the model implemented by the Bank stipulates that all transactions related to the portfolio management service on an individual basis (e.g., initial subscription, subsequent deposits, line changes, etc.) are subject to recommendation by the Bank, and therefore the assessment of the appropriateness of the management lines, based on the characteristics and classification assigned to each of them, with respect to the sustainability preferences expressed by customers is carried out in accordance with the provisions for the investment advisory service as described in the following section to which reference is made.