“There will be solutions to our resource problems”

Nonetheless, the theme has interested Bruce Jenkyn-Jones, managing director of the listed equities team at Impax Asset Management, since he studied chemistry at university 30 years ago. A follow-up Master’s degree in environmental technology sealed the fate of the markets in which he was destined to work. That said, it was not his intention to work in fund management.

He explains: “I spent six years or so as an environmental consultant, which included doing policy studies for the European Commission and the World Bank. I was doing a lot of travelling around the world – Latin America, Asia, Eastern Europe; I was consulting in these areas.”

After a few years, however, a combination of “getting fed up of writing reports no one was reading” and realising that capital allocation makes things happen led Mr Jenkyn-Jones to the investment side of the industry.

“I needed some further education,” he smiles, “so I went to Barcelona and spent a couple of years doing an MBA. After that, my initial investment work was as a utilities analyst at The Bankers Trust.”

Its really understanding how humanity interacts with the planet, and you can see the tensions there Bruce Jenkyn-Jones

His career took the first step on the path to his current position when he met Ian Simm, the founder and chief executive of Impax, who was just starting the company.

“I was helping him, and then almost immediately we established this partnership with a Danish group to launch what we still think of as the first environmental markets resource efficiency fund back in 1999. In terms of interest, I didn’t even know what a fund manager was, but I was pretty focused on working in these markets.”

Mr Jenkyn-Jones says the attraction of the resource efficiency and environmental markets space is that there will be increased demand for the world’s resources.

“Its really understanding how humanity interacts with the planet, and you can see the tensions there. We’re a pretty innovative race, and we know there is going to be solution to it, so its about investing in these solutions and trying to make money out of it.”

Since becoming the second person to join Impax, he has seen the business grow significantly, to roughly £2.5bn assets under management, but it has not been without its challenges.

“We were quite early from an investment perspective; it took us six or seven years before our performance attracted interest from more mainstream investors, as people realised it was a unique investment opportunity.

“One of the interesting things is that what we set out as our core idea of these markets – energy efficiency, renewable energy, water, pollution control, recycling, environmental consulting – we anticipated would get much bigger and grow rapidly, and that has happened. When I started, I was looking at 250 companies; now the team here is looking at 1,500.”

Performance from Impax has been consistent, although Mr Jenkyn-Jones acknowledges a couple of years were difficult within the renewable energy sector, as it was dependent on subsidies, and due to the underperformance of its Asia-Pacific strategy.

“In 2011, [the Asia-Pacific strategy] significantly underperformed, and one of those funds was closed down. Considering the speed with which we pursued the Asia investment opportunity, we were very unlucky that after the stimulus of 2009 things slowed down quickly. That led to a lot of the small-cap companies we were invested in underperforming quite badly, so that was probably our biggest challenge.

“But we’re through a lot of the challenges set by Asia and renewables, and performance has recovered.”

Although it runs a number of different strategies, including a water strategy and a recently launched food and agriculture strategy, the company is probably best known for the Old Mutual Ethical fund. However, Mr Jenkyn-Jones is keen to emphasise that the firm is not focused solely on ethical funds.

“It only gets annoying [to be called ethical] if there is a suggestion that we would compromise on returns. Our starting point is that, due to the way the global economy is evolving, it is inevitable there will be greater growth in resource efficiency markets. If you are a decent investor, you should be able to deliver superior returns.

“That said, we are proud of the fact that companies we are investing in are providing solutions to environmental problems. This is a positive element of what we do.”

In addition, he points out that, when looking at individual stocks, you can really add value by looking at the non-financial elements of the business. “As such, we pay a lot of attention to governance and environmental and social risks associated with businesses,” he says.

Having already become associated with these markets, there are no plans to stop there. The team continually thinks about new ways to extend its thinking about resources and how to create opportunities in a wider range of sectors such as financials, healthcare or technology. “But that is more in the R&D stage,” says Mr Jenkyn-Jones.

One of the ways his role has evolved while at Impax is by bringing “interdisciplinary expertise into the team to allow us to successfully cover what is quite a complex set of markets”.

“I’m reasonably interdisciplinary,” the manager says, “but within the team I’ve brought in people who have only done investment management and who are particularly interested in the sector, then we have engineers, scientists and technology experts, people who have worked in venture capital in these markets and who understand the tech as it evolves. We have people focusing on policy and regulation, people who work on governance and environmental, social and governance factors as well.

“In order to cover resource efficiency and environmental markets globally, you need a team with interdisciplinary skills, so my biggest achievement is getting that team reasonably stable and working together in a harmonised unit and with an investment process highly rated by consultants. If people are looking to invest in these markets, we are the go-to group.”

This is highlighted by the fact the firm is seeing more interest in its products from the US, while the UK and Europe markets developed an interest in the area between 2006 and 2009 which has remained stable.

“Where we are really seeing it pick up is in the US. That is around a number of issues as the US sees the importance of resources. They’ve just discovered shale gas, and they’re conscious of the environmental impact of shale gas, so some of our investment ideas resonate with that.”

In the post-RDR UK, Mr Jenkyn-Jones says the challenge for the firm is finding its way onto the right platforms at the right price to get the right distribution, as a lot of private client groups and advisers are using multi-asset funds or multi-strategy funds, so they need to get either a route straight to the adviser “or find where we fit in a multi-asset model”.

“I think we’ve built a really good platform here at Impax,” he adds. “In addition to having the fund management, you also need operations, compliance, sales and marketing and so on. We are sitting at a very interesting point at the moment as an organisation where all that is in place, and as an organisation we could double funds under management without investing more in that platform.

“The next three-to-five years will be all about executing that initiative.”