September, 2023
In this month’s commentary, Claire Jervis shares some highlights from her recent US research trip including Xylem’s ‘Reservoir Center for Water Solutions’ which aims to speed up progress in finding solutions to the world’s water challenges. Claire also attended the the Jefferies’ IT Hardware and Semiconductor summit in Chicago which showcased potential opportunities in the lidar space with these sensors emerging as a ‘new frontier’ for the electric vehicle industry.
We are delighted for WHEB to have won the ESG Clarity Award for ‘Best ESG Fund House (Active)’ in recognition of their commitment to sustainable investing with the judging panel commenting that “in addition to WHEB’s track record as an active impact investor in the UK, there is arguably further evidence in its submission of making continued efforts to drive forward positive change in the sustainable investing market.”
We are pleased to include a special feature written by Seb Beloe and Charlie Crossley, an Investment Engagement Manager at Friends Provident Foundation. “Unleashing the potential of impact measurement in listed equities: The crucial role for asset managers” presents a compelling case for impact investing in listed equities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/monthly-30-09-2023-pensif.pdfAugust, 2023
The outperformance of Energy and other non-impactful sectors, coupled with a structural exposure to mid-sized companies were significant performance headwinds and the Fund delivered a negative monthly return of -0.3%.
Safety was the strongest theme during the month and the largest contributor to performance, while Cleaner Energy was the weakest.
MSA Safety, Hello Fresh, and Autodesk were the strongest performing stocks. MSA Safety’s results beat expectations with strong organic revenue growth and an increase in margins. The company also raised its guidance for the full year. Autodesk also reported ahead of expectations, and HelloFresh bucked negative sentiment to report results that were in line with a positive pre-announcement and re-iterate full year guidance.
SolarEdge, Infineon, and Power Integrations were the largest detractors from return. SolarEdge suffered negative momentum as the US residential solar market navigates the headwinds of higher interest rates. Infineon and Power Integrations struggled as expectations of a weakening semiconductor market grew, along with weaker Chinese export growth.
File:July, 2023
The Fund delivered positive returns in July of +1.4%.
Sustainable Transport and Environmental Services were the strongest themes during the month due to holdings in JB Hunt and Smurfit Kappa, respectively. The prospect of an inflecting freight cycle buoyed specialist intermodal shipper JB Hunt. Cardboard packaging maker Smurfit Kappa rose in anticipation of an improvement in demand as consumer confidence slowly rebuilds.
The Wellbeing theme also performed well driven by the position in HelloFresh. The company reported results with much healthier profits than the market expected.
On the other side of the ledger there were negative contributions from the Safety and Cleaner Energy themes.
Within Safety, MSA Safety performed poorly due to fears of weak demand. Just after the month end, excellent results from the company rebutted this pessimism.
Within Cleaner Energy, SolarEdge and Enphase underperformed. SolarEdge shares were weak due to concerns that high inventory levels in the channel and lower US demand would lead to compressed earnings growth for the duration of the year. Enphase released guidance that disappointed as higher interest rates are dampening demand for residential solar.
This was partially offset by the outperformance of First Solar, also in the theme, which released a strong set of results for Q2 23 and announced a large, long-term contract as well as another new US manufacturing facility.
File:June, 2023
It is now nearly six years since Sir David Attenborough and the BBC debuted Blue Planet 2. The series was the catalyst for a worldwide campaign to reduce the amount of plastic waste entering natural ecosystems and particularly the world’s oceans. With a Blue Planet 3 series now in the offing, Seb Beloe considers how much progress has been made in reducing plastic pollution.
WHEB are pleased to announce the launch of their ninth annual Impact Report. We believe it represents yet another step forward in terms of quality and insight and hope that readers will find it useful. We invite you to visit our impact microsite to view the report and calculate the impact associated with your investment in the Fund.
We are delighted that the Fund was, for a second consecutive year, awarded New Zealand-based Mindful Money’s award for Best Overseas Ethical Fund. The judges were impressed by the framework for stewardship and avoiding harmful investments, including cases where a lack of progress has resulted in divestment. The fund was described as setting a high standard for reporting on the positive impact from companies in the portfolio, along with excellent communication to financial advisers and clients.
During the month, the Fund was re-certified by the Responsible Investment Association Australasia (RIAA).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/202678611.pdfApril, 2023
The Fund fell in April as key sustainability sectors including semiconductors, manufacturing, and automotive underperformed; and many of the larger cap growth stocks which do not meet our thematic criteria remained resilient in the face of higher interest rates.
In a society riddled with low self-esteem and mental health issues, Claire Jervis discusses whether Novo Nordisk’s diabetes and weight loss drug, which has become a TikTok sensation and branded a miracle weight loss drug, can or should be considered positive impact.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/200832721.pdfFebruary, 2023
Following a strong start to the year in January, global equities ended February with a further 2.0% gain despite investors worrying that interest rates may remain higher for longer than previously thought. The Fund returned 1.4% over the same period.
While investing in water can be an excellent way to make a genuine positive environmental impact, Ty Lee (Associate Fund Manager) explains, in this month’s commentary, how investors need to be cautious and focus on investing in companies that contribute directly to improving water quality and water management.
We are delighted that the FP WHEB Sustainability Fund, which investment strategy the Pengana WHEB Sustainable Impact Fund implements, recently won the award for Best ESG Global Equity Fund from MainStreet Partners, a London-based ESG Advisory and Portfolio Analytics firm. The awards recognise a select number of funds and asset managers that have excelled within the universe of 5,800 Funds, managed by over 300 Asset Managers.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/198553351.pdfOctober, 2022
At WHEB, we’re big fans of battery electric vehicles (BEVs). Approximately 8% of the strategy is invested in companies with exposure to BEVs and their value chains. We have also recently launched a scheme internally enabling the WHEB team to have easier and cheaper access via a BEV leasing scheme. But outside our organisation, some people remain unconvinced. In this month’s commentary, Head of Research Seb Beloe explains our position.
Global stock markets rebounded in October. As in recent periods, macroeconomic concerns such as inflation and interest rate expectations played a big role in market movements. There has been a subtle shift in the narrative as fears of recession have increased. Although a recession will put downward pressure on company earnings, it would also support less aggressive interest rate increases (seen as positive for stocks).
On the other hand, from a fundamental perspective, a recession will put downward pressure on company earnings. Because of this balancing act between economic data and earnings risk, markets continued to be volatile despite the overall upward move.
Our Fund returned 6.9% versus the MSCI World which returned 7.8%. Stronger performance in the Sustainable Transport theme was offset by the returns of our Resource Efficiency and Health themes.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/193086262.pdfAugust, 2022
August was a month of two halves for Global Equity markets. At the beginning of the month, investors were upbeat following a better-than-expected earnings season. This soon gave way to broader macro concerns, with equity markets selling off sharply in the latter stages of the month.
Since Richard Nixon led the world by signing the US’ Clean Air Act at the end of 1970 with bipartisan support, there have been many false dawns in the delivery of meaningful Federal policy on climate change. The consequence has been that the United States earned a reputation as a climate laggard. In this month’s commentary, Seb Beloe discusses the significance of the US’ recently passed Inflation Reduction Act with both spending provisions and tax breaks and aimed at lowering greenhouse gas (GHG) emissions and health care costs.
We are pleased to announce that Pengana has been named a Responsible Investment Leader by the Responsible Investment Association Australasia in its landmark annual Responsible Investment Benchmark Report launched this month. This recognises our commitment to responsible investing and attributes as an investment manager.
August was a month of two halves for Global Equity markets. At the beginning of the month, investors were upbeat following a better-than-expected earnings season. This soon gave way to broader macro concerns, however. The turn in sentiment followed comments from the US Federal Reserve. The Fed stated they would “use our tools forcefully” and inflict “some pain”. As the month finished, the MSCI World had declined -2.5%.
The Fund underperformed the index returning -5.9% reversing a large portion of July’s outperformance. Strength in Water Management was offset by Resource Efficiency, Environmental Services, and Well-being.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/190936700.pdfJuly, 2022
The MSCI World Index was up 6.4% over the month, with the Fund strongly outperforming by returning 10.7%. Having fallen -16.0% in the first half of the year, global equity markets rebounded in July. In this month’s commentary, Ty Lee discusses whether air conditioning is a solution to heatwaves given that they account for about 16% of the total electricity used in buildings globally, a figure which is set to grow dramatically in the coming years.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/189909752.pdfJune, 2022
With Australia’s inflation rate now sitting at 5.1%, every supermarket aisle has seen price rises, and many staples including lettuce and broccoli have more than doubled in price over the last two years. Similar headlines can be seen throughout the world. This is putting immense pressure on low-income families, who are forced to spend a much larger proportion of their budget on food. Senior Analyst Claire Jervis takes a look at some of our portfolio holdings that are contributing to long term solutions for improving and increasing global food production.
We are pleased to announce that, in New Zealand, the Pengana WHEB Sustainable Impact Fund has won Mindful Money’s “Best Ethical Overseas Fund”. The judges were impressed by the thought leadership that Fund has shown and recognised that it looks beyond investments in companies that create positive impact to also seek out companies that can catalyse change. The judges also commended the WHEB fund on its strong analytical approach to engagement and voting, along with excellent communications to financial advisers and clients. In other news, WHEB has been named a 2022 Best for the World™ B Corp™ in recognition of its exceptional positive impact on its Customers – for a fifth time. We’re thrilled to have been recognised again.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/189401316.pdfMay, 2022
Global equity markets, represented by our benchmark the MSCI World Index of stocks, finished May little changed from where they started but volatility remained high. While there was a lot of talk about peak inflation this month, the data showed little hard evidence to support that. Ongoing monetary policy tightening and China’s COVID lockdown remained the major concerns for the market.
Our strategy performed slightly better than the benchmark MSCI World Index in May. We saw strong performance from the Sustainable Transport and Health themes. This was partially offset by the weaker performance in the Wellbeing and Education themes.
Sustainable Transport was the best performing theme in May. Infineon was the largest positive contributor in the theme. Infineon is a global market leader in power semiconductors. Its electronic components enable a range of technologies including electric vehicles, active safety, renewable energy, and the Internet of Things. The company announced solid quarterly results in the month driven by improving global car production volumes and continuous strong demand for power infrastructure and renewable energy.
The Health theme also contributed positively this month. There were strong contributions from the life sciences tools companies, including Agilent, Danaher and Thermo Fisher. Their shares were weak in April due to the concerns over the roll-off of COVID related businesses but the underlying demand for the full range of their products remains strong. Agilent posted a solid set of results and raised its full-year guidance driven by continuous strong demand for their equipment in the pharmaceutical and biotech markets. Thermo Fisher also presented an upbeat long-term growth outlook in its Analyst Day, guiding 7-9% long-term organic growth. This is driven, amongst other things, by the strong growth prospects in its bioproduction business.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/188012030.pdfApril, 2022
The Fund underperformed the MSCI World Index in April, returning -5.0% vs -3.1% for the benchmark. Inflation concerns and supply chain disruption continued to weigh on the Resource Efficiency theme, while the prospect of higher interest rates affected higher growth names in Cleaner Energy and Health. Losses were partially offset by our Environmental Services and Education portfolio companies.
Resource Efficiency was the weakest theme in April, with Daifuku being the largest negative contributor. Daifuku is a warehouse automation equipment provider in Japan which has been impacted by rising costs and delays in the availability of some parts due to supply chain disruptions. There are also concerns that it will face slower demand from automotive customers, given the headwinds that industry is currently facing. However, both inflationary pressures and supply chain disruption, as well as the recent trend towards deglobalisation provide longer term tailwinds for warehouse automation companies. Recent results from Daifuku show continuing positive order trends and even in this environment, management upgraded operating margin guidance. We remain confident in the company’s ability to manage these short-term headwinds and capture the long-term opportunity in automation equipment
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/187437847.pdfMarch, 2022
Global equity markets bounced back in March, despite the continued war in Ukraine and the significant disruption to global supply chains. Many regard the bounce as a bear-market rally, as the macro backdrop remains gloomy with waning fiscal stimuli and increasing stagflation risks. The Fund underperformed the benchmark MSCI World Index in March with supply chains being further disrupted by the war in Ukraine which weighed on the performance of the Sustainable Transport and Resource Efficiency themes.
In this month’s commentary, WHEB discuss the drivers of dramatic growth in ESG and sustainable investing over the past few years, and how the rapid adoption of standardised ESG ratings is likely to be an impediment to the holistic understanding of sustainability issues going forward
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/186224935.pdfFebruary, 2022
February saw continued weakness in global equity markets. Rising inflation, an elevated oil price, and the outbreak of war in Ukraine all weighed on markets. Meanwhile, supply chain disruptions and freight shortages persist. The Fund outperformed the MSCI World Index in February, returning -4.4% versus -5.4% respectively.
However, the Fund remains behind the Index so far in 2022, following the significant rotation seen in markets during January. Cleaner Energy companies returned to favour this month, following a period of recent weakness. A significant proportion of the Fund’s relative outperformance during February was driven by this theme.
The Fund outperformed the MSCI World Index in February, returning -4.4% versus -5.4% respectively. However, the Fund remains behind the Index so far in 2022, following the significant rotation seen in markets during January. Cleaner Energy companies returned to favour this month, following a period of recent weakness. A significant proportion of the Fund’s relative outperformance during February was driven by this theme.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/184841286.pdfJanuary, 2022
The new year has started with significant disruption in markets and significant weakness overall. Global markets have not seen a sustained inflationary or rising interest environment in a long time. Indeed, many market participants will never have experienced one. In the face of this uncertainty, it is important to maintain perspective, discipline, and our focus on positive impact as a source of investment returns over the long term. Associate Fund Manager, Victoria MacLean, provides an overview of how WHEB approaches these volatile markets, how they have affected our strategy, and what it means for sustainable investors.
In the face of uncertainty, it is important to maintain perspective. After long periods of strength, annual returns of 20% or more, it is not uncommon to see corrections of 10% or more. Since 1980 there have been 15 such instances. It’s also important to maintain discipline. For WHEB that means focusing on the fundamentals and the long-term. In periods of market strength, we have to discern between the companies where there is a lot of hype and those with genuine long-term structural drivers. In a sell-off, we must differentiate between those where there has been a fundamental change and those where there is a stock market reaction with no effect on the structural drivers. We continue to believe that the long-term source of investment returns are those secular trends, and importantly that sustainability and positive impact are a key component of that. In particular, we continue to see growing commitments from governments and corporates to combat climate change which we view as a positive long-term driver for the strategy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/183915078.pdfDecember, 2021
Stock markets rebounded strongly in December after a weaker month in November. Despite the rapid spread of the COVID variant Omicron, global equity markets were unfazed by the resulting negative economic impact. The Fund returned 1.54% versus our benchmark MSCI World Index which returned 1.69%.
Despite climate change becoming an all-encompassing threat and overshadowing most other environmental concerns, the Fund also implicitly targets the conservation and recovery of biodiversity. With society’s current rate of consumption overusing Earth’s biological resources by at least 56%, this month’s commentary discusses WHEB’s approach to biodiversity.
In other news, we are delighted to announce that WHEB has won “European ESG Manager of the Year” in the Funds Europe Awards 2021.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182656951.pdfNovember, 2021
It’s astonishing to see the increasing number of battery electric vehicles (EVs) on the roads, particularly in London. However, the number of public chargers remains static. EV drivers are starting to suffer less from ‘range anxiety’ and more from ‘queue anxiety’. In this month’s commentary, WHEB’s Libby Stanley shares her experience of being an EV driver and discusses the investment opportunities in easing the charging bottleneck. We are pleased to announce that the Fund has been added to the FirstWrap platform, and is now available on all major wrap platforms.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181790480.pdfOctober, 2021
As COP 26 draws to a close, we wanted to share WHEB’s first-hand experience of the conference with Managing Partner George Latham and Head of Research Seb Beloe attending the Glasgow event. In this month’s commentary they reflect on the achievements at the conference, the powerful role individuals and the private sector can play, and what will actually be delivered.
Inflation dominated news flow in October. Recent data have pointed to continuing inflation, on an increasing range of goods, as well as continuing wage growth. This is casting doubt on United States Federal Reserve Chairman Jerome Powell’s view that inflation will quickly return to the 2% goal. Bond yields rose, showing that bond investors think interest rate hikes are coming sooner than previously forecast.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181279902.pdfSeptember, 2021
There was a sharp turn in market sentiment in September as investors responded to abruptly changing conditions. A significant rise in natural gas prices in Europe and global supply chain disruption drove fears of inflation. Power outages in China exacerbated the global supply chain turmoil. There were also concerns that a liquidity crisis for China Evergrande could cause ripple effects on emerging markets. Overall, the Fund returned -4.6% versus -3.0% for the MSCI World Index. While the Health and Cleaner Energy themes were relatively strong, the strategy saw underperformance from the Resource Efficiency and Wellbeing themes. In this month’s commentary, Claire Jervis discusses how this year’s supply chain disruptions are much more than just a transitory pandemic-related phenomenon, being driven by extreme weather events, unprecedented (and growing) demand for climate transition technologies, and geopolitics.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179824067.pdfJune, 2021
Global markets continued to rise in August, underpinned by central bank support, strong corporate earnings, and fiscal spending plans. Whilst the spread of the COVID-19 Delta variant, forthcoming Fed tapering, inflationary pressures and China’s regulatory crackdown continue to be risks lurking in the background, the MSCI World Index recorded its seventh straight monthly gain. The Fund outperformed this benchmark in August, having returned 3.80% versus 3.08%. Outperformance mainly came from our Health and Wellbeing themes. On the other hand, the Education and Water Management themes were relatively weak.
The Health theme made the biggest positive contribution to performance in August, led by Agilent and Danaher. Agilent is a specialist in the development and manufacture of bio-analytics for the life sciences and chemical analysis industries. Recent results showed robust growth, propelled by Agilent’s strong market position in the life sciences, diagnostic and analytical divisions. Danaher is a leading provider of measurement equipment that goes into clinical and medical laboratories, as well as environmental applications. The share price has shown continued momentum from good results reported in July.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179230833-1.pdfJuly, 2021
Global equities rose higher this month, supported by easy financial conditions from central banks and the momentum of reopening economies. Markets appeared sanguine about the economic implications from the spread of the more transmissible Delta variant of COVID-19, though many Asian countries struggled to contain new COVID outbreaks. China and Hong Kong indices fell sharply as investors feared tighter government regulations in the education, health and technology sectors. The Fund outperformed the MSCI World Index this month, returning +5.2% versus +4.0%.
Outperformance mainly came from our Health and Environmental Services themes. On the other hand, the Cleaner Energy and Safety themes were relatively weak. Our Health theme was the biggest positive contributor in July, and ICON and Danaher were the best performers in the theme. Both companies reported similar COVID-related tailwinds in recent results. ICON is an outsourced clinical research organisation, and continues to see strong demand for its services for research into COVID vaccines and therapies. Danaher is a leading test and measurement equipment provider, whose products are used in numerous applications including life sciences, diagnostics and applied environmental solutions. It continued to see very strong demand for its COVID diagnostic tests, contradicting the declining trend many of its peers have reported recently. More importantly, both companies saw continued recovery in their core non-COVID businesses, which bodes well for their longer-term growth prospects.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/176281988.pdfMay, 2021
In May, equity markets continued to weigh an increasingly vigorous economic recovery against the risks of rising inflation. According to OECD, the global economy is set to grow this year at the fastest pace in almost half a century. But this rapid growth itself may precipitate an increase in inflation, and in turn, lead to rising interest rates. As low-interest rates have pushed equity markets up for more than a decade, this is food for thought for investors. In the early stages of a reflationary rally, current share prices often assume greater importance than the quality of earnings. We draw parallels between the current environment and the period following the US presidential elections in 2016 – the strategy underperformed in both periods. History suggests that this is short-lived and as the cycle continues the companies with better quality earnings tend not only to catch up but to outperform.
Against this finely poised backdrop, our benchmark, the MSCI World index gained +1.2% in May. Our strategy underperformed the benchmark returning +0.6%. The strongest contributions came from the Sustainable Transport, Health, and Wellbeing themes. These were offset by weaker performance from the Resource Efficiency and Education themes.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/173462220.pdfFebruary, 2021
Global stock markets declined in the second half of February as bond yields rose. This was interpreted as signalling a possible return of inflation, and perhaps an end to the very accommodative monetary policy of the last decade. This prospect of significant change resulted in some sharp rotations in sector and style performance.
"Value" stocks, those considered more able to return capital quickly to investors, outperformed "growth" stocks, which are those considered to have more exciting long-term prospects. The best performing sectors were those associated with the early stages of an economic recovery, such as financial and fossil energy companies.
The Fund returned -2.2%, underperforming our benchmark MSCI World index which returned +1.6%. Although we are careful with valuations, our sustainability companies have long growth paths and tend to be seen more as "growth" than "value". We have no exposure to financial companies or fossil energy. We also saw some profit taking in themes which had outperformed the market over the last 12 months. This meant that we saw weaker performances in our two largest themes, Health and Resource Efficiency. It was partially offset by the strong performance in Sustainable Transport and Water Management. Our Health theme was the weakest performer this month. The defensive qualities of the healthcare industry, and the anticipation of the end of the pandemic, weighed heavily on sentiment. In terms of individual stock performances, Cerner was the largest negative contributor in the theme. Its IT solutions help improve overall patient outcomes while reducing healthcare costs. The share price was under pressure as its core business continued to struggle due to the pandemic.
ICON also contributed negatively in the Health theme. It is one of the leading clinical research organisations ("CROs"). During February it announced plans to acquire a key competitor, PRA Health Sciences. The market was concerned about this large horizontal merger. We are more confident in ICON'S ability to integrate the two businesses. Our Resource Efficiency theme was another underperformer this month. It was largely driven by the poor performance from Daifuku. It is a leading provider of warehouse automation solutions. The company announced a new 3-year plan. The market found the targets underwhelming; we think management is being conservative.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/168917979-1.pdfDecember, 2020
Global stock markets continued to rise in December in the hope of vaccine rollout and additional economic stimulus. The bellwether US S&P 500 index ended 2020 at a record high. However, stock market returns did not keep pace with the rapid appreciation in the AUD and the Fund returned -0.3% for the month, slightly outperforming the MSCI World Net TR Index (AUD unhedged) which returned -0.5%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/163878119.pdfNovember, 2021
In November, global stock markets recorded some of the strongest gains on record on the back of significant progress in the development of a vaccine for Covid-19. As investors became more bullish on the outlook, we saw a meaningful sector and style rotation. This reversed the market-style trends we have seen since the inception of the pandemic.
Whilst still generating a meaningful increase of 6.5% in the month, the Fund gave back some of the relative outperformance of the year and underperformed our benchmark MSCI World Index, which returned 7.5%. Our Health and Resource Efficiency themes have been our two strongest performance contributors year-to-date. Both underperformed this month. On the other hand, our Sustainable Transport and Cleaner Energy themes rose sharply. Danaher was the worst performer within the Health theme, with Thermo Fisher also weak. Their life science products have made a meaningful contribution to COVID-19 testing, and the development of therapies. Both stocks were hit by the positive news around the significant progress in vaccine development. Resource Efficiency was another theme that didn't keep pace with the wider market rally. Kingspan was one of the underperforming stocks in the theme. It is a leading supplier of building insulation materials. The stock fell sharply on reports from the official inquiry into the tragic fire at Grenfell Tower in London in 2017. The inquiry will conclude in January. We are closely following the proceedings and have engaged with the company. Once the inquiry is complete, we will evaluate its findings and review our position.
Our Sustainable Transport theme was the strongest performer this month. The particularly strong performance came from two of our automotive OEM suppliers Hella and Aptly. Hella is a leading automotive supplier with a focus on high-efficiency LED lighting. It also produces electronic products including sensors, driver assist systems, and energy management components. Its products help improve automotive fuel efficiency and safety. Aptiv provides advanced safety solutions and signal and power solutions. It is well positioned to benefit from the shift to electrical and autonomous vehicles. The positive developments in Covid-19 vaccines have led to a strong rebound in the cyclical sectors including the automotive sector. Both Hella and Aptiv benefited from this positive sentiment.
Another strong theme this month was Cleaner Energy. The renewable energy sector has performed well this year as many more countries have committed to net-zero carbon emission. TPI Composites is one of the companies that benefit from this policy momentum. It is a leading outsourced wind blade manufacturer. The company delivered meaningful margin expansion in recent results due to improved utilisation as a result of growing demand. This recent sector and style rotation was not a surprise to us. It was reasonable to expect that the arrival of a vaccine would reverse some of the clearest pandemic trends at some point. Despite this, we believe COVID-19 has led to some long-term changes. These include increased health and safety standards and more resilient supply chains. This Fund is well positioned to capture these long-term secular trends. 'THERE ARE DECADES WHERE NOTHING HAPPENS, AND THERE ARE WEEKS WHERE DECADES HAPPEN'.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/162875800-3.pdfOctober, 2020
n October, Covid-19 spread through the northern hemisphere with the onset of winter, setting new infection records in several countries. Global stock markets were rattled by the prospect of further lockdowns in Europe and the US. Some investors were also repositioning themselves in advance of the US Presidential election in early November.
Against this backdrop, the Fund’s benchmark MSCI World Index declined -1.1% over the month. The Fund gained slightly, outperforming the benchmark with a return of +0.1%. Similar to last month, this outperformance was driven by the Health and Resource Efficiency themes. It was partly offset by weaker performance in the Wellbeing and Education themes.
Our Health theme made the largest positive contribution. HMS Holdings was the standout stock in the theme. It is an information technology company which helps to make sure costs are properly allocated in the US healthcare system, thereby reducing waste. It has also expanded into population health management (“PHM”). Its PHM services improve the wellbeing of population by identifying high-risk members and engaging them to take action. They also provide comprehensive care management when needed. The stock price surged due to an unconfirmed report of a possible sale of the company. Both Danaher and Thermo Fisher also contributed strongly in the Health theme. They both have a very strong market position in the scientific instruments industry. As scientists have been working tirelessly on COVID vaccine and therapies, both companies saw strong demand for their life sciences tools.
Our Resource Efficiency theme was another strong performer. Daifuku was once again the best contributor to performance in the theme this month. It is a leading material handling system provider. The pandemic has revealed the vulnerability of global supply chains. The demand for logistics equipment and technologies are likely to accelerate in order to improve supply chain efficiency. Daikin shares also did well. It is a leading manufacturer of energy-efficient air conditioners and refrigeration equipment. It has managed to raise its guidance twice this year despite the challenging business environment, due to its tight control on costs.
Wellbeing was the weakest theme this month. It was largely driven by the poor performance from Orpea. It is a high-quality operator of elderly care homes as well as post-acute and psychiatric clinics. Despite its stellar performance in handling the pandemic, the stock was under huge pressure due to the further lockdown measures imposed in some European countries.
Our Education theme continued to underperform in October. As explained last month, the US education sector is seen as very politically exposed. Both of our holdings in the theme, Grand Canyon Education and Strategic Education, continued to be under pressure ahead of the US presidential election. Nevertheless, we are happy to hold both companies despite this political noise. They are making a meaningful positive social impact. They help to address a serious skills gap problem through providing high quality accessible online education. They also both focus on underserved populations. Uncertainty abounds in the coming month. The effectiveness of the national lockdown in Europe remains to be seen. The associated economic fallout is hard to predict. Policy changes following the US presidential election will have a significant impact in a number of themes that we invest in.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179230833.pdfticker: HHA0007AU
commentary_block: Array
factsheet_url:
https://pengana.com/our-funds/wheb-sustainable-impact-fund/
Under
REPORTS AND RESOURCES
release_schedule: Monthly
fund_features:
Pengana WHEB Sustainable Impact Fund invests in a diversified global portfolio of high quality companies which produce goods and services that provide solutions to sustainability challenges. It aims to achieve capital growth over the medium to longer term.
- The Fund is managed by UK-based WHEB Asset Management LLP.
- Invests in a diverse portfolio of global companies providing solutions to these sustainability challenges via nine sustainable investment themes – five of these are environmental (cleaner energy, environmental services, resource efficiency, sustainable transport and water management) and four are social (education, health, safety and well-being).
- The portfolio consist of approximately 50 global companies.
manager_contact_details: Array
asset_class: Foreign Equity
asset_category: Global Other
peer_benchmark: Foreign Equity - Other Index
broad_market_index: Developed -World Index
structure: Managed Fund