Specialist investment manager Impax Asset Management has launched a Dublin-domiciled fund for long-term growth in environmental markets.
According to the fund factsheet, the Impax Environmental Leaders Fund will provide capital to companies that have more than 20 per cent of their underlying revenue generated by sales of environmental products or services in the energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets.
The environmental markets address a number of long-term macro-economic themes, including growing populations, rising living standards and consumption, and depletion of limited natural resources, the firm said.
It added that the underlying companies of the fund tend to have higher market capitalisations than those in its Specialists strategy, and targets a lower tracking error and slightly higher yield.
The fund is based on the Impax Leaders Strategy which has a seven-year track record, boasting an AUM of £506m (as at 31 December 2015).
The portfolio will be broadly diversified across environmental markets and is expected to hold between 40 and 60 stocks with low turnover and no geographical bias.
The fund is managed by Hubert Aarts who has been lead portfolio manager of the Leaders Strategy since inception. Mr Aarts will be supported by Bruce Jenkyn-Jones and David Winborne and the 12-strong listed equity team.
Reactions
Provider view
Bruce Jenkyn-Jones, head of listed equities at Impax, said: “We are pleased to expand our product range for UK investors. We believe that the Impax Environmental Leaders Fund is well aligned with strong growth in investor interest in positive climate and environmental solutions. Investors are waking up to the inevitability of the long-term decline of the energy and natural resources sectors and an accelerated shift towards decarbonisation. Last December’s Paris Climate Agreement is proving to be an additional strong catalyst for these markets.”
Adviser view
Sebastian van Mook, financial adviser at Shropshire-based Abacus Associates, said: “Environmentally friendly funds are on the up, and it is not necessarily because of people’s ecological and ethical stance. With markets as volatile as they are now, investors are searching for different investment opportunities to explore. I think environmental markets are certainly one for the future, but the big question is whether they are right for investment now.
“There is considerable risk with this, but the manager seems to be trying to hedge the risk by investing in companies that already generate substantial revenue from environmental products and services.
“A specialised and experienced fund manager will be required because a lot can go wrong with this type of fund – these projects can undercapitalise quite quickly.”
Charges
Ongoing charge of 0.80 per cent.
Verdict
Global equity markets have had a hard landing at the start of the New Year, after enduring a somewhat unsavoury 2015. As people begin to lose faith in traditional funds, there appears to be a growing number of investors willing to bite the bullet and invest their money in different investment opportunities – despite the inflated risk. The adviser is quite right to suggest that the environmental markets are likely to grow in the future. Oil is non-renewable, so future generations will have to rely on other sources of energy.
