Tue, 03/12/2019 - 13:28
As global leaders gather in Madrid for COP25, Investec Asset Management has launched the Investec Global Environment Fund (OEIC) for UK retail investors to address their increasing focus on mitigating the risks of climate change.
The Fund is a sterling based, UK domiciled replica of the Luxembourg domiciled strategy which launched earlier this year. Over the 12 months to date, the Global Environment composite strategy (launched 1 September 2018) has delivered 30.1 per cent compared with 11.2 per cent returned by the MSCI ACWI over the same period.
The global equity strategy, which invests in public companies across the value chain that are driving the transition to a low carbon world, is designed to assist investors focused on decarbonisation whilst aiming to provide long term income and capital growth. By identifying companies that stand to benefit from the energy transition – be that the move to renewable energy sources, electrification of transportation, heating and industrial processes, or increasing resource efficiency across the world - the Fund aims to provide investors with exposure to a USD2.4 trillion per annum growth opportunity together with a natural hedge against the unknown impact of climate change. The transition to decarbonisation represents a powerful multi-year structural growth opportunity for investors driven by regulatory change, technological change and the desire of consumers to tackle climate change.
The differentiated, high-conviction diversified fund is run by portfolio managers Deirdre Cooper and Graeme Baker with the support of Investec Asset Management’s broader investment team. At the core of the Fund’s investment process is a detailed analysis of the full carbon value chain together with a unique approach to identifying businesses whose products are contributing actively to the reduction of carbon emissions.
The Fund aims to address climate risk and decarbonisation in three ways; first, by providing access to the investment opportunity represented by companies participating in the sustainable transition towards decarbonisation; second, redressing the balance of structural underexposure to the enablers and beneficiaries of decarbonisation; and finally, providing a means by which to measure and hedge against systemic carbon risk in portfolios.
The high-conviction Fund will invest in 20-40 stocks selected from an investment universe covering over 700 companies, with a total market cap of over USD6.5 trillion and only circa 10 per cent overlap with the MSCI ACWI. Alongside company engagement and annual impact reporting, the Fund assesses not only scope one and two, but also indirect scope three carbon emissions, regularly omitted by competitors including passive strategies, but often accounting for over 75 per cent of a company’s emissions. Additionally, the team conducts proprietary screening of carbon avoided for every stock, enabling investors to monitor the alignment of the portfolio with its sustainability goals.
Deirdre Cooper, co-Portfolio Manager, Investec Global Environment Fund, says: “Decarbonisation is arguably the single biggest investment that the world has had to make in peacetime. The numbers dwarf any other investment opportunity today and it is imperative that listed equities play a part in funding the transition to a low carbon economy. Asset managers have a responsibility to engage with company management teams to ensure this happens in a meaningful and measurable capacity.
“Our decarbonisation universe consists of over 700 securities and USD6.5trillion of market cap – split across all the major regions around the world, and about 60 per cent of the GICS (Global Industry Classification Standard) sectors - and those companies are exceptionally well placed to benefit from the regulatory and technology shocks that will accelerate the transition.”
Charlotte Gibson, Global Head of Client Management, Investec Asset Management, says: “With the world now increasingly focused on the question of how to address climate change, we believe that positive investment action must play a more prominent role in facilitating the transition to a lower carbon economy. The case for investing in public companies that tackle climate risk is a mainstream investment priority. The launch of the Investec Global Environment Fund (OEIC) addresses the increasing demand from clients to invest responsibly. By building the right investment framework and fully understanding the latent carbon risk in their portfolios, it is now possible for investors to both meet their long-term financial objectives and take control of their climate risk.
“Investec’s Planetary Pulse research recently identified the willingness of UK adults to invest in a more environmentally focused manner, with more than six in ten people saying they would be comfortable with a proportion of their workplace pension automatically defaulting into environmental investments. The Investec Global Environment Fund aims to provide UK investors with competitive long term returns whilst contributing to a cleaner and more sustainable future – the two are no longer mutually exclusive.”
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