Global equities impact manager, WHEB, embarked on a rare trading spree last year as valuations on favoured stocks fell, according to associate fund manager, Claire Jervis.
“We traded much more than usual last year to take advantage of more attractive pricing,” Jervis said. “As a long-term manager the average length of our holdings is five years plus so we don’t trade very much.”
In NZ this month to promote the WHEB Sustainable Impact Fund to local investors, she said the bargain-shopping came during a tough period for the manager’s strategy, which has underperformed the benchmark MSCI World Total Return Index over the last 18 months.
Like most sustainability themed funds last year, the WHEB portfolio of 45 or so impact-focused stocks failed to keep pace as the energy sector provided one of the few pockets of positive returns in a year of double-digit negative results for the broader market.
“We only have a 15 per cent overlap with the benchmark so there will be periods where we underperform,” Jervis said. “But investors need to take a long-term perspective on the companies in our portfolio that supply the products and services that are in dire need as the world economy transitions.”
Offered in this region under the banner of Australian multi-boutique firm, Pengana, the WHEB fund targets medium-to-large global listed firms that are making a positive impact to big-picture environmental and social challenges.
The fund frames its investment strategy around nine sustainability themes including cleaner energy, resource efficiency, health and education, reporting on both financial returns and detailed impact outcomes.
Most impact funds typically focus on smaller-scale direct investments but Jervis said larger listed companies have the skills and heft to bring about necessary change.
She said WHEB also looks beyond some of the obvious environmental, social and governance (ESG) star sectors such as electric vehicle manufacturers.
“A lot of the attention goes to EVs and energy technology but 45 per cent of global carbon emissions comes from other sectors including agriculture and materials like plastic and cement manufacturers,” Jervis said. “We consider companies that are building for climate adaption and resilience, too.”
For example, WHEB has invested in US-listed firm Advance Drainage Systems, which supplies products such as storm-water drain infrastructure.
“But the company is also the biggest recycler of plastic in North America as it uses the recycled material to build pipes,” she said. “That’s a double-impact story for us.”
Pengana appointed WHEB as manager of the Australian fund in 2017, replacing a strategy previously run by the now defunct Hunter Hall.
However, WHEB has a long history in the UK dating back to the 1990s, evolving through several guises over the ensuing years.
The firm manages about A$3 billion globally – mostly in the flagship international equities portfolio – of which about A$300 million comes via the Pengana fund.
WHEB is represented in NZ by The Investment Store, headed by Matthew Mimms.
Mimms said the fund has gained some support from ESG-minded NZ advisers with local consultants also starting to look at the strategy.
“But it’s early days,” he said.