Information for investment professionals only

News & Views Q2 2024

Columbia Threadneedle
Sustainable Outcomes Global
Equity Strategy“The Magnificent 7” refers to the seven biggest US technology related stocks1 which, except for Tesla,
helped to drive markets to record highs at the end of the 2Q.

Pauline Grange
Portfolio Manager,
Global Equities

1

This rally was fuelled by excitement around the Artificial Intelligence (AI) secular theme, which inturn drove US market concentration to unprecedented levels with the top 10% largest US stocks
accounting for around 75% of the US stock market. But the valuation moves in the Magnificent
7 has not just been about re-rating – their economic profit has grown strongly from $40 billion in2010 to a forecasted $460 billion in 2024, generating 26% of the total US market economic profit,
roughly equivalent to their valuation in the market.

Magnificent 7 include Apple, Microsoft, Nvidia, Alphabet (Google), Amazon, Meta (Facebook), and Tesla (as of July 2024)1

Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

% of Total Economic Profits

28%
26%

30%
25%
20%
15%
10%
5%
0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
10 Largest Stocks by Market Cap

Magnificent 7

Source: Credit Suisse Holt TMT insights report, 5th August 2024, Universe Largest 1000 US Companies by TTM market cap.

But with momentum and positioning in technology
overextended, it didn’t take much for cracks to start to emerge
by quarter end. We took advantage of the strong momentum
in technology stocks over the quarter by taking some profit
across several of our technology holdings including two of
the Mag 7, Nvidia and Microsoft, as well as global leading
semiconductor foundry, TSMC.
Overall, the Columbia Threadneedle Sustainable Outcomes
Global Equity Strategy rose 3% over the quarter, in line with
the MSCI ACWI, with Nvidia and TSMC, Eli Lilly (showing
stronger than expected demand for their obesity treatments)
and NextEra (strength in US renewable development) key
contributors to strategy performance.
Trump’s surge in US voting polls, after Biden’s dismal
performance at the presidential debate, triggered some rotationin the market at the end of June. His comment that “Taiwan
should pay the US for its defence” contributed to a tech sell
off at the end of June. A Chinese invasion of Taiwan would be
devastating for global technology companies given 68% of theworld’s chips, and more than 90% of its advanced chips, arecurrently produced in the country2. It’s no surprise that risingtension in the Middle East combined with increased prospectsof “Trump 2.0” led to “Geopolitical conflict” overtaking “Higher
Inflation” as the number one market concern by quarter end3.

Any repeal of the Inflation Reduction
Act to be limited

However, we retain our base case that although Trump may
roll back some of the IRA incentives, such as electric vehicle
tax credits, he is unlikely to undertake a full-scale IRA repeal.
IRA tax incentives for nuclear power, wind and solar, anddomestic manufacturing appear safe with bipartisan support
given the benefits of renewable investments are predominantly
flowing to Republican-controlled states, driving local job
creation, and raising tax revenues.

Record global temperatures reinforce
importance of energy transition
The world also hit a new climate milestone at the end of June
– the first 12-month streak with global average temperaturesconsistently >1.5C above pre-industrial levels. The current
temperature spike comes above the last record-breaking El
Nino temperature streak of 2015/2016. And although global
average temperatures are set to moderate as the current El
Nino conditions peak, temperatures are likely to stay well above
long-term historical averages due to excess greenhouse gas
emissions in the atmosphere. The world is now on course for
2.5-2.9C warming, which will necessitate greater investment
into climate adaptation infrastructure as extreme weather
events become more severe and frequent. This, combinedwith broader electrification trends and a multi-decade transitionin our energy systems, supports our positive outlook for ourenvironmental holdings, regardless of near-term weakness
related to political rhetoric.

Trump’s rise in the polls also weighed on clean technology
stocks as a Republican win likely means a reversal of Biden’s
climate change agenda and in particular, clean technology
incentives under his Inflation Reduction Act (IRA).

https://www.economist.com/special-report/2023/03/06/taiwans-dominance-of-the-chip-industry-makes-it-more-important
BofA Global Fund manager survey, July 2024
3
BofA Global Fund manager survey, July 2024
1
22

Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

Sustainability theme focus: ‘Our ageing world’
The world’s growing population, which reached 8 billion in
2022, and the strains it places on our finite natural resources
is widely covered. But what is less reported is how most of
the world’s major economies are currently undergoing themost rapid demographic change since the second world war.
Our population is rapidly ageing due to a combination of
longer life expectancy, declining childhood mortality
and falling fertility rates. And although a peaking global
population can be celebrated from an environmental
perspective, it raises new social challenges.
Globally, the fertility rate is now 2.3 births per woman
compared to 3.3 births in 1990. This is getting close to the 2.1
births per woman needed to maintain a population size.

More than 50% of countries, housing 60% of the world’s
population and producing 90% of global GDP, have areplacement rate below 2.14. Even India, which has
seen rapid population growth in recent years, is now
below replacement rate.

The biggest problem the world will face in
20 years is population collapse
Jeff Bezos, Amazon Chairman/co-founderRate of births per female vs the replacement rate for populations
World

8

Europe7

Sub-Saharan Africa

children per female

6

Japan

5

China

4

United States ofAmerica3

United Kingdom

2

India

1

Republic of Korea

01950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Replacement-rate

Source: UN WPP 2023

Falling fertility rates are largely the outcome of positive global
developments. As countries get richer, women get greaterrights, access to education and access to contraception.
They also enjoy more choices outside of childbirth andincreasingly participate in the workforce. This is why
government policy interventions to directly boost fertility havebeen largely unsuccessful to date. However, in many developed
economies the rising costs of raising a child, including the
exorbitant cost of childcare, are also contributing to fallingbirths per family. Here policy support, especially around accessto more affordable childcare, is more welcome.
Coupled with falling birth rates, people are living longer. In 1900
the average life expectancy of a newborn was 32 years old, but
this doubled to 71 by 2021 and continues to rise5. By 2040 it
is forecast that there will be as many over 65s as under 25s inEurope and North America6. Vastly improved life expectancy
is one of the greatest achievements of modern science.
Advances in healthcare innovation have supported declining
childhood mortality (in the 19th Century, 50% of children could
expect to die before their fifth birthday vs 4% today7) andincreased life expectancy (for example, the number of deaths
caused by cardiovascular disease in the US has fallen by 70%
since 19708).
But these shifts drive large social challenges. A key concern
is that a ballooning older population reliant on a shrinking
working population leads to a rise in dependency ratios.
A smaller workforce means lower tax revenue, whilst more
retirees increase pressure on government budgets to spend
on pensions and healthcare – all at a time when governments
globally are already tackling record levels of debt.

In descending order of contribution: India, Nigeria, Pakistan, Democratic Republic of the Congo, Ethiopia, Tanzania, Indonesia,
Egypt and USA. Source: United Nations, Shifting Demographics, 24 October 2019
Our World in Data: Life Expectancy, 2023
6
UN Population Prospects
7
Our World in Data: Life Expectancy, 2023
8
WHO Health report
4

5

3

Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

Ageing population risks driving up
healthcare-related spend
Over 65s account for a higher share of healthcare spending, US only
100%

2%
14%

80%
60%
40%
20%
0%

8%

85+

28%

65-84

13%

21%

55-64

21%

13%
9%

45-54
35-44

25%

12%

19-34

9%

0-18

Share of population

Share of health spending

13%

Ages 65+
36%

12%
Ages
45-64
34%
Millenials
GenZ
Ages 0-4430%

Source: KFF analysis of 2021 Medical Expenditure Panel Survey data

Ageing populations can also have a detrimental impact on
productivity due to growing labour shortages and skills gaps
as workers retire.
Japan is viewed as a case study on how shifts in a country’s
demographic profile can have profound and far-reachingeconomic effects. Japan’s working population has been in
decline since the 1990s, with the latest data suggesting thatthe number of Japanese nationals is falling by almost 100 per
hour9 and over 65s now accounting for 30% of the population10.
For Japan, a declining working population has meant three
decades of falling labour productivity, which is now the lowest
amongst G7 nations11, economic stagnation12 and lower
inflation due to softening of aggregate demand. Ultimately,a shrinking labour force means firms can’t find the workers
necessary to expand production or economic output.
But whilst attempts to reverse the course of ageing populations
have largely proven futile, there are solutions to help make thisolder population less dependent.
Healthy ageing is a key component of minimising the burden
on healthcare systems and enabling people to remain in
the workforce for longer if they so choose, minimising theirreliance on younger workers. This means maximising the
economic contribution of older groups whilst preventing thedependence on social and healthcare systems. In Japan, older
workers are now making a key economic contribution with one
in seven workers aged over 6513.

Companies offering solutions to support the health andwealth of an ageing population should experience structural
demand growth from these demographic changes. In BMI’s
Megatrend Survey, 30% of pharmaceutical companies are
increasingly looking to develop drugs tailored to supporting
ageing populations, for example treatments for age-related
conditions such as cardiovascular diseases, neurodegenerative
conditions, cancer, respiratory diseases, and vision and hearing
loss14.
Our ‘Health and Wellness’ theme supports investment inseveral companies offering solutions that support the healthof an ageing population. These include our holdings tackling
vision care (EssilorLuxottica, Cooper Companies) to the life
science companies supporting innovative new drug discoveries(Thermo Fisher, Biotechne), and pharmaceutical companies
offering drugs helping to prevent chronic diseases (Eli Lilly withboth their Alzheimer’s drug pipeline and obesity treatments
helping to reduce chronic illnesses).
In an ageing population, companies also need to leveragetechnology and automation to help improve the productivity ofshrinking labour pools. In this sense, the arrival of Generative
AI may be perfectly timed given its potential for transformative
productivity improvements. Again, Japan is a case study in
how countries with an ageing population are more likely toadopt robots and other forms of technological automation
tools to enhance productivity. Japan is now the world’s largest
industrial robot manufacturer, delivering 45% of global supply15.
Attitudes to ageing also need to change. Companies must
adapt their hiring and work policies, tackling ageism in sourcing
workers and offering greater flexibility, such as part-time or
remote working, to accommodate older employees. A cultureof lifelong learning is also needed as people work for longer.
This will benefit education companies such as our holding
in RELX which provides information and analytical tools for
professionals. More inclusive employment policies can also
improve company access to, and retention of, talent. Bright
Horizons (a holding in the strategy) is benefitting from morecompanies offering childcare and eldercare support benefits
for their employees to promote greater staff retention.
Ultimately the world needs to adapt to a multi-generational
workforce. This includes investing in healthcare to support
healthy ageing and technology innovation to maximise labour
productivity, supporting demand for many of the solutions
offered by companies held across our strategy.

FT.com, Japan’s native population declines at a record rate as births plunge, 12 April 2024
BBC News: Japan population: One in 10 people now aged 80 or older, 19 September 2023
Nippon.com: Japan’s productivity ranks lowest among G7 nations for 50 straight years, 6 January 2022
12
NHK World – Japan, Reviving Japan’s Economy: Breaking Free of 3 Decades of Stagnation, 12 August 2023
13
Nippon.com: A Third of Japanese People Aged 70 to 74 Still in the Workforce, 10 October 2023
14
Fitch solutions: Megatrends to 2052: Ageing Populations to Influence Drug Development and workforces
15
International Federation of Robotics: Japan is World´s number one Robot Maker, 10 March 2022
9

10
11

4

Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

Q2 2024 Strategy new company purchases
Company

Sustainability in practice
Bio-Techne supplies the chemical compounds that enable their customers to discover and develop nextgeneration therapeutics, vaccines and diagnostics. They are the leader in this field with a vast catalogueof purified proteins and reagents to support the research and development of new therapies, as well as
the diagnostics and analytical tools to support testing in labs. In essence, Bio-Techne help their customers
scale from drug discovery to production. They demonstrate clear intentionality supported by strong productSustainable Category

innovation with an extensive catalogue of over 500,000 unique products, which in turn has supported
industry leading growth rates and growth into new verticals. This vast portfolio also positions them well for
global health megatrends such as gene therapy. We view the correction in earnings and share price fromCOVID related highs as offering an attractive entry point into this sustainable leader in healthcare innovationand discovery.
Aligned corporate metrics and targets to SDG 3 - commercialised >1,600 new products to support
biopharma, academic and diagnostics customers in 2023.

Company

Sustainability in practiceRoper Technologies owns a diverse portfolio of 28 businesses with a focus on software companies
selling market leading, mission critical solutions in non-cyclical end markets. Their diverse set of software
companies support stable sales growth for the group, independent of macro trends. Over 75% of groupsales are from software solutions that are mission critical to their end user, with the belief that many of theirproducts will be the last to be turned off. These companies are predominantly in sustainable aligned verticals

Sustainable Category

including healthcare, education, government, and insurance. The biggest companies in their portfolio,
with annual sales of more $500 million and comprising roughly 40% of group sales, are Deltek (enterprisesoftware for project-based management), Neptune (smart water meter solutions) and Vertafore (software forthe insurance industry).
The focus of their acquisitions is to acquire high quality leaders in critical and niche areas with the potential
for high cash return on investment (rather than just growth) which can then be deployed to acquire morebusinesses. Although sustainability is not the focus of M&A, their purchases have tended to be in sustainablealigned niche verticals.
Aligned corporate metrics and targets to SDG 8 - In 2023 deployed ~$2.1 billion of capital toward software
acquisitions, the biggest being Syntellis Performance Solutions ($1.25 billion), a leading provider of cloudbased software solutions for healthcare, financial institutions, and higher education markets.

Company

Sustainability in practice
Shopify provides simple, low-cost software which enables small businesses to set up and sell products
online efficiently and quickly, supporting their growth and fostering job creation (SMEs account for 70%
of jobs in the OECD area). Its innovative cloud-based model is the most flexible and lowest friction model
available in the marketplace, well ahead of the competition. Shopify is the only one of its competitorsthat charges on a commission basis as opposed to a licensing fee. This means it can add products andservices for free, such as search engine optimisation, whereas other providers charge for these services,

Sustainable Category

promoting greater economic inclusion for smaller companies. It also positions itself as offering an alternative
e-commerce experience, outside of Amazon, where smaller businesses can have greater brand control.
This combined with a rich and growing ecosystem of 13,000+ applications built by developer partners
supports a strong and widening competitive moat and consistent share gains in eCommerce. Despite
strong growth, its solutions have only penetrated 2% of what they view as a large global eCommerce market,
supporting a long runway of future growth for the company.
Aligned corporate metrics and targets to SDG 8 - In 2023 facilitated $235.9 billion in GMV (grossmerchandise value)

The mention of specific stocks is not a recommendation to deal.

5Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

Columbia Threadneedle Sustainable Outcomes
Global Equity Strategy
GIPS Report Columbia Threadneedle Investments EMEA APAC
Statement of Performance Results
Calendar Year Gross-of-fees
Return (%)

Reporting Currency: USD

Net-of-fees
Return (%)

Index
Return (%)

Composite
3-Yr St Dev
(%)

Index
3-Yr St Dev(%)

Internal
Dispersion(%)

Number ofPortfolios

Total
Composite
Assets (mil.)

Total
Firm Assets(bil.)

2023

26.52

25.71

22.81

19.05

16.27

N.A.

≤5

145.2

122.452022-22.56-23.07-17.96

20.18

19.86

N.A.

≤5

139.1

114.86

2021

19.21

18.45

19.04

14.52

16.83

N.A.

≤5

177.7

161.32

2020

28.12

27.30

16.82

N.A.

N.A.

N.A.

≤5

1.5

149.82

2019

33.17

32.32

27.30

N.A.

N.A.

N.A.

≤5

1.2

140.52

Annualized Trailing Performance, 31 December 2023
PeriodGross-of-fees
Return (%)

Net-of-fees
Return (%)

Index Return(%)

1 Year

26.52

25.71

22.81

Inception

14.79

14.05

12.27

Inception Date: 31 December 2018

1. Columbia Threadneedle Investments Global Asset Management claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report incompliance with the GIPS standards. Columbia Threadneedle Investments Global Asset Management has been independently verified for the periods of January 1, 1993 to December 31, 2022. The
verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of
the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, anddistribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracyof any specific performance report. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of thecontent contained herein.
2. The Firm is defined as Columbia Threadneedle Investments Global Asset Management (formerly known as Columbia Threadneedle Investments North America prior to June 30, 2024). The Firm
provides a broad range of investment management and related services to individual, institutional, and corporate clients around the world. Columbia Threadneedle Investments is the global brandname of the Columbia and Threadneedle group of companies. The Firm was redefined on June 30, 2024, to include the GIPS firms of Columbia Management Capital Advisers, Columbia Threadneedle
Investments EMEA APAC, and Columbia Threadneedle (EM) Investments Limited. The Columbia Management Capital Advisers firm offered investment management and related services to clients
participating in various types of wrap programs. The Columbia Threadneedle Investments EMEA APAC firm consisted of all portfolios managed by various Threadneedle group companies. The
Columbia Threadneedle (EM) Investments Limited firm was a subsidiary of Columbia Threadneedle Investments International Limited, which defined a portion of its business specializing in Global
Emerging Markets equities. As of November 1, 2020, the Firm was redefined to include Columbia Cent CLO Advisers, LLC. As of January 1, 2017, the Firm was redefined to include Columbia Wanger
Asset Management, LLC, a wholly-owned subsidiary of Columbia Management Investment Advisers, LLC. Beginning March 30, 2015, the Columbia and Threadneedle group of companies, which
includes multiple separate and distinct GIPS-compliant firms, began using the global offering brand Columbia Threadneedle Investments. The Firm includes accounts managed by various Columbia
Threadneedle Investments entities, including Columbia Management Investment Advisers, LLC, Threadneedle Asset Management Limited, Threadneedle Investments Singapore (Pte.) Limited,Threadneedle Management Luxembourg S.A., and other affiliated entities.
3. The strategy invests at least two-thirds of its assets in shares of high dividend yield companies worldwide. Derivative instruments may be used for efficient portfolio management and currency
management. The primary use of derivatives is not designed to create a highly leveraged investment position. The composite was created June 30, 2007.
4. The gross-of-fees returns are time-weighted rates of return net of commissions and other transaction costs. Net-of-fees returns are calculated by deducting from the monthly gross-of-fees composite
return one-twelfth of the highest client fee (model fee) in effect for the respective period. Composite returns reflect the reinvestment of dividends and other earnings.
5. Internal dispersion is calculated using the equal-weighted standard deviation of the annual gross returns of those portfolios that were included in the Composite for the entire year. If the composite
contains five or fewer accounts for the full year, a measure of dispersion is not statistically representative and is therefore not shown.
6. The three-year annualized standard deviation measures the variability of the gross-of-fees composite and benchmark returns over the preceding 36-month period. It is not required to be presented
when a full three years of performance is not yet available.
7. Returns are calculated net of non-reclaimable withholding taxes on dividends, interest, and capital gains. Policies for valuing investments, calculating performance, and preparing GIPS Reports, as wellas the list of composite descriptions, list of pooled fund descriptions for limited distribution pooled funds, and the list of broad distribution pooled funds are available upon request.
8. The following fee schedule represents the current representative fee schedule used as the starting point for fee negotiations for institutional clients seeking investment management services in thedesignated strategy: 0.7% on the first £25m; 0.6% on the next £25m; 0.5% on the next £50m; negotiable thereafter. Gross of fee performance information does not reflect the deduction of management
fees. The following statement demonstrates, with a hypothetical example, the compound effect fees have on investment return: If a portfolio’s annual rate of return is 10% for 5 years and the annual
management fee is 70 basis points, the gross total 5-year return would be 61.1% and the 5-year return net of fees would be 55.5%.
9. The benchmark for this composite is the MSCI AC World Index. The MSCI AC World Index is designed to provide a broad measure of equity-market performance throughout the world and is comprisedof stocks from 23 developed countries and 24 emerging markets. Index returns reflect the reinvestment of dividends and other earnings and are not covered by the report of the independent verifiers.
10. Past performance is no guarantee of future results and there is the possibility of loss of value. There can be no assurance that an investment objective will be met or that return expectations will
be achieved. Care should be used when comparing these results to those published by other investment advisers, other investment vehicles and unmanaged indices due to possible differences incalculation methods.
11. Prior to 30/06/2024 the composite was known as Threadneedle Global Equity Income Composite.
12. This composite was included in the Columbia Threadneedle Investments EMEA APAC GIPS firm prior to joining the Columbia Threadneedle Investments Global Asset Management GIPS firm on
6/30/2024. As the composite was not part of Columbia Threadneedle Investments Global Asset Management prior to 6/30/2024, firm assets are shown as “N/A” in the performance table.

6Columbia Threadneedle Sustainable Outcomes Global Equity Strategy | News & Views Q2 2024

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