Fund Complex: Shelton Funds
Management Company: (1) Shelton Capital Management; (2) Shelton Capital Management. Sub-advisor: Green Alpha Advisors
Funds Affected: (1) Shelton California Tax-Free Income Fund and (2) Shelton Green Alpha Fund
Sustainable Investing Strategy: ESG Integration
(1) Shelton will seek to invest in municipal bonds that meet environmental, social and governance screens so that the fund may be considered a green municipal bond fund. In evaluating environmental, social and governance considerations, Shelton uses criteria including, but not limited to, use of bond proceeds, expected environmental impact, the source of revenues for repayment and reputation of issuer.
(2) The fund invests primarily in common stocks of companies that Green Alpha Advisors believes are leaders in managing environmental risks and opportunities, have above average growth potential and are reasonably valued. The sub-advisor maintains a proprietary universe of green economy companies based on proprietary set of qualitative criteria. A “green economy” company is one that works to improve human well-being and increase economic efficiencies, while significantly reducing environmental risks and ecological scarcities. Green economy companies provide products and services that help economies to adapt to, solve or mitigate the effects of key environmental and economic systemic risks, namely resource scarcity and climate change. The sub-advisor maintains a proprietary list of at least 400 companies from multiple industries and economic sectors that, at its sole and absolute discretion, meet their qualitative criteria. This list is created after a review of a company’s business plan, activities and operating policies, as well as other qualitative criteria, including but not limited to, strength of management team, corporate governance practices, brand and product reputation, competitive positioning, industry growth probabilities, market size analysis, assessment of barriers to entry, assessment of aggregate sustainability risks and defensible patents and intellectual property. Stocks to be purchased by the fund are selected from this green economy universe by the sub-advisor using quantitative and qualitative analyses. Quantitative analysis refers to a mathematical review of the companies’ operating performance and characteristics related to its investment attractiveness, while qualitative analysis refers to the sub-advisor’s exercise of judgment when evaluating the green economy and sustainability characteristics as related to the future prospects of a company.