Global Sustainable Equity Funds Update

Duncan Goodwin

With 2022 heading towards the final quarter, we thought it was timely to revisit the investment case for global sustainable investing.

With global markets increasingly reflecting the spectre of higher inflation for longer, global economic slowdown, quantitative tightening, energy shortages in Europe and rising tensions between the US and China, we continue to believe the underlying fundamental growth drivers for sustainable investing remain more valid than ever, namely:

  • The prolonged war in Ukraine has reiterated the need for energy independence and security via alternative, green sources. Our funds have 16% exposure to energy transition.
  • Rising tensions between the US and China in particular has seen a fresh wave of onshoring of key strategic products such as semiconductors and processors. Our funds have 21% exposure to infrastructure.
  • With inflation in the UK at approximately 10% and higher than expected globally, the need for more efficient production methods in industries such as agriculture has become more politically relevant. Our funds have 8% exposure to food productivity and safety.
  • Finally, the decarbonisation of key strategic industries such as chemicals, pharmaceuticals, cars and clothes has also moved up the political agenda with oil prices having spent most of the year above $90/bbl. The funds currently have 5% invested in the circular economy theme.


Crucially, government policy such as RePower in Europe and the Inflation Reduction Act in the US have provided a clear framework for this transition.

Why Invest in Our Sustainable Funds?

In the crowded space that is sustainable global funds, we believe there are several features that differentiate Premier Miton’s global sustainable equity funds:

  • Breadth – The funds are currently investing in seven themes, which includes health and wellbeing at 19% and 20% for the Global Sustainable Optimum Income Fund and Global Sustainable Growth Fund respectively. There is no overriding exposure to one particular sector. The funds are not a tech fund, a green energy fund, or a healthcare fund. In a volatile and potentially directionless market, we believe breadth is going to be key. With a beta of one (as at 30.09.2022) for the Premier Miton Global Sustainable Growth Fund, we believe the fund has the potential to perform based on stock-specific drivers rather than market direction. Active share for both funds remains above 90%, and the funds continue to hold no FAANGS and no direct Chinese or Hong Kong-listed companies.
  • Disruption – We have just over 19% of the funds in small, innovative and potentially high growth companies. We believe that these companies have the potential to change and disrupt industries and have a positive impact on both fund performance and society.
  • Valuation – The 12-month forward PE of the funds is 15.9x and 15.6x for the Global Sustainable Optimum Income Fund and Global Sustainable Growth Fund respectively. We believe the fund valuation reflects the breadth of opportunities we have identified to deliver growth, predominantly outside of technology, rather than taking a value approach.
  • Sustainability and ESG are embedded in all stages of the investment process
  • Income – The Premier Miton Global Sustainable Optimum Income fund has consistently delivered against its target 6% yield with another full year of >6% yield just completed. We believe our combined approach of sustainability, growth and income sets us apart in the market.

Source: Bloomberg as of 30.09.2022

Performance

Both Premier Miton Global Sustainable Growth and Premier Miton Global Sustainable Optimum Income funds are top quartile in the peer group rankings in the IA Global Sector and IA Global Equity Income sector respectively since manager tenure (January 2020).

Looking at year to date returns and annualised volatility against peers (those within the peer group with an AUM greater than £500mn, priced in sterling with a focus on growth), the Premier Miton Global Sustainable Growth Fund has generated the highest returns, with lower volatility than most, as shown below:

Source: FE Analytics, based on UK sterling, taken on a total return basis as at 30.09.2022. Performance is shown net of fees with income reinvested. Volatility is calculated on a weekly basis. *For full performance disclaimer please see Important Information footnote.

Outlook

We believe the Premier Miton Global Sustainable funds offer structural earnings growth from a wide variety of regions, sectors, market capitalisations and themes. Our process is clear and consistent, and we are disciplined in its application. Year to date performance would support the view that our funds’ current positioning also offer an alternative to many of the established global sustainable growth funds.

How would you rate the information in this article?

Click on a star to rate it.

We are sorry that this post was not useful for you.

Write your comments here:

Tell us how we can improve this post?

Risks

The value of investments may fluctuate which will cause fund prices to fall as well as rise and investors may not get back the original amount invested. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.

Infrastructure investments are often in large-scale projects whose profitability can be affected by supply problems or rising prices for raw materials or natural resources. Changes in the wider economy and government regulation can also have a significant influence.

Funds that follow a sustainable investment approach exclude companies which do not meet their sustainability criteria from the investment universe and therefore can carry a higher risk than funds with a more diversified portfolio.

These funds may experience high volatility due to the composition of the portfolio or the portfolio management techniques used.

Future forecasts are not reliable indicators of future returns.

Please note that the target yield and the income paid out are not guaranteed and the income paid to investors will fluctuate.

In certain market conditions companies may reduce or even suspend paying dividends until conditions improve. This will impact the level of income distributed by the fund.

IMPORTANT INFORMATION:

Whilst every effort has been made to ensure the accuracy of the information contained within this document, we regret that we cannot accept responsibility for any omissions or errors. The information given and opinions expressed are subject to change and should not be interpreted as investment advice. Reference to any particular stock or investment does not constitute a recommendation to buy or sell the stock / investment.

All data is sourced to Premier Miton unless otherwise stated. Persons who do not have professional experience in matters relating to investments should not rely on the content of this document.

Performance source: FE Analytics.  Based on GBP class C Acc for the Premier Miton Global Sustainable Growth Fund and C Inc for the Premier Miton Global Sustainable Optimum Income Fund, on a total return basis to 30.09.2022. Performance is shown net of fees with income reinvested. On 20 January 2020, these funds moved from a single pricing basis (mid) to a swing pricing basis, which is where the price can swing to either a bid or an offer basis depending on the investment and redemption activity in the fund. This means the investor selling or buying fund shares bears the associated [dis]investment costs and protects the continuing holders in the fund. Performance could be shown on a combination of bid, mid or offer prices, depending on the period of reporting.

Source for thematic weightings: Bloomberg, data as at 30.09.2022.

For your protection, calls may be monitored and recorded for training and quality assurance purposes.

A free, English language copy of the funds’ full prospectus, the Key Investor Information Document and Supplementary Information Document are available on the Premier Miton website, or you can request copies by calling us on 01483 306090.

Financial Promotion issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227. Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

007651/181022

Stay up to date

Sign up to receive the latest articles straight to your inbox

Disclaimer

This section of the website and the content it contains is for retail clients only and by persons who are resident in the United Kingdom [who are not US persons]. Professional advisers should refer to the Professional Advisers site.

The content of the pages of this website is for your general information only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell or purchase shares in the funds or portfolios or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

Read the full 'website terms of use' >

Disclaimer

This section of the website and the content it contains is for professional financial advisers only and should not be relied upon, or circulated to, retail clients. Retail clients should refer to the Private Investor's site.

The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell shares in the funds or portfolio or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products, represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

Read the full 'website terms of use' >

The content you are trying to access is intended for investment professionals only.

Please use the button below to return to the hompage.

Disclaimer

This section of the website and the content it contains is for retail clients only and by persons who are resident in the United Kingdom [who are not US persons]. Professional advisers should refer to the Professional Advisers site.

The content of the pages of this website is for your general information only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell or purchase shares in the funds or portfolios or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

Read the full 'website terms of use' >

Disclaimer

This section of the website and the content it contains is for professional financial advisers only and should not be relied upon, or circulated to, retail clients. Retail clients should refer to the Private Investor's site.

The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell shares in the funds or portfolio or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products, represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

Read the full 'website terms of use' >