Investec Asset Management has launched the 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% compared with 11.2% 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 $2.4trn 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 strategy 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, it 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% 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.