February Report

As discussed in our January update, Foresight Group Holdings Limited (“Foresight”), a leading UK-based investment manager specialising in sustainable investments, has acquired the business and assets of WHEB Asset Management LLP (“WHEB”), the manager of the Pengana WHEB Sustainable Impact Fund (APIR code: HHA007AU). As part of this transaction, all investment staff from WHEB have joined Foresight, ensuring continuity in managing the Pengana WHEB Sustainable Impact Fund.

As a result, Pengana Capital Limited (“Pengana”), the responsible entity for the Pengana WHEB Sustainable Impact Fund, appointed Foresight Group LLP as the new investment manager on 12 March 2025, replacing WHEB Asset Management LLP.

There will be no change to the Fund’s investment philosophy, strategy, or process. The Fund’s name, other service providers, and governance structure will also remain unchanged. The WHEB team will retain full autonomy over all aspects of the investment process, ensuring a seamless transition for investors.

Top Holdings (alphabetically)

AstraZeneca PLC

United Kingdom

Health Care

AstraZeneca is a high-quality pharma company with a strong portfolio of commercial products that lead to better overall health outcomes for patients, who are often suffering from life-threatening or debilitating illnesses. The company's products treat issues of high unmet need, particularly in the oncology and rare disease portfolios.

Ecolab Inc.

United States

Materials

Ecolab sells cleaning products and services to restaurants, hotels, hospitals, food and beverage producers and other businesses. The company has a particular focus on energy and water efficiency. Ecolab has developed a range of products and services that help to reduce, and in some cases even eliminate, the use of water in a wide range of industrial applications. In turn, this helps to lower costs through a reduction of energy and water impacts.

Infineon Technologies AG

Germany

Information Technology

Infineon Technologies manufactures semiconductors and related systems. The company's products include power semiconductors, as well as microcontrollers and radio frequency products and sensors. The products are key enablers of several important end markets including electric and hybrid road vehicles, renewable power generation including wind turbines, efficient power management in industrial systems and applications and in other types of electrical infrastructure.

Linde plc

United States

Materials

Linde plc produces and distributes industrial gases. The company operates globally supplying oxygen, hydrogen and other gases to a very wide range of downstream markets including into manufacturing industries, petrochemical and electronics industries. The gases are used in a variety of applications including in making manufacturing processes more efficient and in reducing harmful emissions. The company is establishing a strong presence in the green hydrogen market and also sells oxygen and other gases into the healthcare sector.

MSA Safety, Inc.

United States

Industrials

Founded in Pittsburgh in 1914, MSA originally stood for 'Mine Safety Appliances'. This was changed in 2014 to 'MSA Safety' to reflect the broader range of products the company has developed. Today, MSA still manufactures products such as fixed gas and flame detection systems which are used across industry. They are also a leading manufacturer of self-contained breathing apparatus and fire helmets for firefighters as well as fall protection equipment for working at height.

Smurfit Westrock PLC

United States

Materials

Smurfit Kappa Group Plc collects, manufactures and sells recycled cardboard. The company is headquartered in Ireland and operates throughout Europe and the Americas. Smurfit Kappa is the largest producer of recycled cardboard products in Europe with clients in food, beverages, household consumables and industrial markets.

TE Connectivity plc

United States

Information Technology

TE Connectivity is a US-based manufacturer of electronic components and wireless systems. The company's main market is the automotive industry where its products are used to improve safety and fuel efficiency through increased levels of automation and electrification. The company does also sell products into industrial and telecommunications markets where they are often used in applications to help improve energy efficiency and safety and other types of electrical infrastructure.

Thermo Fisher Scientific Inc.

United States

Health Care

Thermo Fisher Scientific is one of the largest suppliers of analytical instrument, equipment, consumables and software for healthcare and environmental research, analysis, discovery and diagnostics. The company offers a very wide range of products and services including the equipment needed to analyse samples as well as the variety of containers and other consumables needed to handle them.

Trimble Inc.

United States

Information Technology

Trimble is the leading provider of location-based solutions which contribute to efficiency and productivity improvements. It operates predominantly in the construction, transport, and agriculture end-markets, where we expect the company to benefit from increasing demand for efficiency improvements. The company is listed in the US but derives around 50% of its sales from countries outside the US.

Xylem Inc.

United States

Industrials

Xylem manufactures a wide range of products and provides services to the water industry. The company's water infrastructure business provides a range of pumps, filtration and testing and treatment equipment to water utilities. The company also supplies commercial, residential markets with water and wastewater systems, and provides measurement and control solutions. Xylem's strategy is characterised by the application of intelligent technology to improve water efficiency, in products such as smart meters and intelligent monitoring equipment.

Market Review

The MSCI World Index fell -0.4% in February, dragged down by poor performance of the US and Asia.

US stocks struggled during the month due to weak economic data and concerns that President Trump’s tariffs will negatively impact the world’s largest economy. Against this backdrop, Treasury yields fell, with global bonds acting as diversifiers against equity losses.

Meanwhile, despite persistent growth worries in Europe and the UK, the region’s stocks continued to outperform their US counterparts over the month. Financials maintained their strong run amid monetary easing cycles while defence stocks benefited from a renewed focus on domestic production.

In the UK, inflation’s services component remained stubborn and rose, but early in February, the Bank of England eased the main policy rate by a quarter of one percent, weighing growth concerns alongside the inflation outlook.

In the global market, Consumer Staples was the strongest sector over the month, followed by Real Estate and Energy. Consumer Discretionary and Communication Services were the main laggards by some margin.

Fund Review

The Fund delivered negative performance over the month of -1.2%.

The weakest performer was First Solar (Cleaner Energy), as political uncertainty around the Inflation Reduction Act and nervousness ahead of the company’s FY’24 results pressured the stock. Arcadis (Environmental Services) also detracted from the uncertain political environment, as the company is exposed to government infrastructure spending.

On the other side of the ledger, Daifuku (Resource Efficiency) was the top performer, with the company releasing its full-year guidance during February, meeting its Operating Margin target 3 years ahead of schedule. Gerresheimer (Health) also performed well, with rumours of a takeover offer increasing the market’s confidence in Gerresheimer’s potential undervaluation at the current share price. Additionally, positive news from client Novo Nordisk was encouraging for the company’s future growth prospects. Infineon (Sustainable Transport) delivered beat-and-raise results driven by strong demand for electric vehicles in China.

Overall, the Health and Resource Efficiency themes were the main detractors from return, while Sustainable Transport and Water Management contributed positively.

Outlook

While the last few years have been difficult for WHEB and impact strategies in general, we believe we have good reasons to be optimistic about the future.

Sentiment for impact investing is very low, which can be seen in the portfolio valuation relative to local markets, such as Price to Earnings or Price to Book Value ratios. Markets usually turn when the last marginal seller has left.

We are confident that most of the underperforming stocks in our portfolio have been hit by the market’s focus on short-term issues while the fundamental, longer-term investment case is sound.

We have conviction that an increasing number of sustainability markets will grow independently of the political environment. Although President Trump does stand quite explicitly against much of the transition to a more sustainable economy, the polarisation of US politics is galvanising those that continue to believe in the strong logical case for sustainability. We anticipate a slow reversal of the current negative momentum from here.

We therefore remain excited about the future and convinced that the opportunity has never been greater.