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Dunham Emerging Markets Stock A DAEMX Sustainability

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Sustainability Analysis

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Sustainability Summary

Dunham Emerging Markets Stock Fund has a number of attributes that may meet the expectations of sustainability-focused investors, despite some issues worthy of attention.

Dunham Emerging Markets Stock Fund's holdings are exposed to average levels of ESG risk relative to those of its peers in the Global Emerging Markets Equity category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.

One key area of strength for Dunham Emerging Markets Stock Fund is its medium Morningstar Portfolio Carbon Risk Score of 9.58 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.

One potential issue for a sustainability-focused investor is that Dunham Emerging Markets Stock Fund doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes. The fund has relatively high exposure (11.17%) to companies with high or severe controversies. Controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Examples of types of controversies include bribery and corruption scandals, workplace discrimination and environmental incidents. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. Such controversies can also damage the reputation of both companies themselves and their shareholders.

ESG Commitment Level Asset Manager