Investec has launched the Investec 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 the asset manager launched earlier this year.
It is run by portfolio managers Deirdre Cooper (pictured) and Graeme Baker with the support of Investec Asset Management’s broader investment team. It is high-conviction, investing in 20-40 stocks selected from an investment universe of over 700 companies with a total market cap of over US$6.5 trillion.
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.
The fund undertakes detailed analysis of the full carbon value chain and aims to identify companies that stand to benefit from the energy transition – such as a move to renewable energy sources, electrification of transportation, heating and industrial processes, or increasing resource efficiency across the world.
Investec said the fund 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 fund aims to address climate risk and decarbonisation in three ways:
- by providing access to the investment opportunity represented by companies participating in the sustainable transition towards decarbonisation
- by redressing the balance of structural underexposure to the enablers and beneficiaries of decarbonisation
- by providing a means by which to measure and hedge against systemic carbon risk in portfolios.
Deirdre Cooper, co-Portfolio Manager of the fund, said, “Decarbonisation is arguably the single biggest investment that the world has had to make in peacetime. The numbers dwarf any other investment opportunity today and it is imperative that listed equities play a part in funding the transition to a low carbon economy. Asset managers have a responsibility to engage with company management teams to ensure this happens in a meaningful and measurable capacity.
“Our decarbonisation universe consists of over 700 securities and $6.5trillion of market cap – split across all the major regions around the world, and about 60% of the GICS (Global Industry Classification Standard) sectors – and those companies are exceptionally well placed to benefit from the regulatory and technology shocks that will accelerate the transition.”
Investec said that alongside company engagement and annual impact reporting, the fund assesses scope one and two and also indirect scope three carbon emissions, which, it said, often accounts for over 75% of a company’s emissions but does not always feature in fund manager analysis.
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.
Investec added that over the 12 months to date, the Global Environment composite strategy (launched 1 September 2018) delivered 30.1% compared with 11.2% returned by the MSCI ACWI over the same period. (Source: Investec Asset Management as at 31 October 2019).
