Best In Class  

Best in Class: Pictet Global Environmental Opportunities

Pictet believes the environmental market is approximately $2 trillion in size and is growing at 6 per cent to 7 per cent per annum.

The managers specifically target companies where a minimum 20 per cent of their activities are actively solving environmental challenges, although the aggregate focus across the portfolio is closer to 65 per cent.

Fundamental analysis is then undertaken on potential stocks. The team assess the quality of the business and financial attractiveness.

Once initial screening is undertaken of around 3,500 companies, around 400 qualify for further screening.

A final list of 200 stocks, with the best risk return profiles, is then drawn from this with further analysis undertaken.

Portfolio construction is built into the process when assessing every stock, which ensures the final 50-holding portfolio is well diversified.

The fund has a strong bias in favour of secular growth, but valuations remain important, so it is more a case of growth at a reasonable price. There is also a mid-cap bias.

Top holdings include American Water Works (4.2 per cent) and Ecolab (3.9 per cent) which provides water, hygiene and energy technologies and services that protect people and vital resources.

Principles have not impacted performance on this fund as it is top quartile in the IA Global sector over five years, returning 94.2 per cent to investors (vs. 68.3 per cent for the sector and 82.8 per cent for the MSCI World Index).

Environmental issues are only going to grow in importance in the long-term and the diverse nature of this vehicle makes it a specialist offering all investors should consider as a compliment to the core holdings in their portfolio.

Darius McDermott is managing director of FundCalibre