For the month ending 31 January 2020, the Fund returned 2.1% compared to the MSCI World Net TR Index (AUD unhedged) which returned 4.4%. The emergence of the Wuhan coronavirus has created a headwind to growth in China, with many sustainable products created in a global supply chain that includes China. As the virus spreads, so the challenge to global growth will increase.
Sustainable Transport was the worst-impacted theme, accounting for over half of the underperformance. Companies in the theme include Norma, Aptiv, and Hella. They all provide components enabling low- and zero- emissions cars and trucks. Part of the growth story for these companies is demand from China. China already leads the world in some areas of low-emissions transport, for instance electric-drive buses and is also a key manufacturing site for the components these companies use. The current slowdown from the coronavirus is creating a clear near-term challenge for these companies. In the longer term however, we do not see how this will undermine the transition to low-carbon transportation.
Other impacted stocks included AO Smith which sells water and air purification equipment, and efficient water heaters; DSM which supplies nutrition and specialty materials; and Horiba provides gas testing and control equipment. With all of these businesses, we remain convinced of the longer term sustainability-led opportunity for each of them.
This underperformance was partially offset by companies with more U.S. domestic exposure. These include Roper Technologies which is benefiting from a big traffic control contract in New York, and TPI Composites which was the biggest single positive contributor. TPI supplies wind turbine blades. A decision by the U.S. Congress to create a more favourable regulatory environment improved sentiment in the sector. Even before this, we were very positive on the prospects for wind power.
We also had a positive contribution from our Water Management theme. The companies in this theme play an important role in climate change adaptation. Two of the smaller companies in the theme did well this month: China Water Affairs, and Advanced Drainage Systems (ADS). ADS is a recent addition to the portfolio and its range of storm- and waste- water management products are in high demand in southern and south western U.S. states, which are particularly impacted by a changed climate. It also uses recycled input plastic, benefiting from the lower costs of a circular economy.
||Ansys||United States||Information Technology|
||APTIV||United States||Consumer Discretionary|
||Danaher||United States||Health Care|
||Intertek Group||United Kingdom||Industrials|
||MSA Safety||United States||Industrials|
||Roper Technologies||United States||Industrials|
||Varian Medical Systems||United States||Health Care|
|1 Month||1 Year||3 Years P.A.||5 Years P.A.||SINCE INCEPTION|
|Strategy (partial simulation2)||14.5%||10.5%||6.2%|
|VOLATILITY3||13.1%||NUMBER OF STOCKS||51|
Partner, Fund Manager
Partner, Head of Research
The Pengana WHEB Sustainable Impact Fund invests in companies with activities providing solutions to sustainability challenges. WHEB have identified critical environmental and social challenges facing the global population over coming decades including a growing and ageing population, increasing resource scarcity, urbanisation and globalisation. The Fund invests in 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). WHEB’s mission is ‘to advance sustainability and create prosperity through positive impact investments.’
|Harding Loevner International Fund||Axiom International Ethical Fund||Axiom International Ethical Fund (Hedged)||Australian Equities Fund|
|High Conviction Property Securities Fund||Global Small Companies Fund||WHEB Sustainable Impact Fund||Emerging Companies Fund|
|High Conviction Equities Fund||Pengana International Equities Limited (ASX: PIA)||Private Equity Trust (ASX: PE1)||Alpha Israel Fund|
1. From August 2017, performance figures are those of the Pengana WHEB Sustainable Impact Fund’s class A units (net of fees and including reinvestment of distributions). The strategy’s AUD performance between January 2006 and July 2017 has been simulated by Pengana from the monthly net GBP returns of the Henderson Industries of the Future Fund (from 1 January 2006 to 31 December 2011) and the FP WHEB Sustainability Fund (from 30 April 2012 to 31 July 2017). This was done by: 1) converting the GBP denominated net returns to AUD using FactSet’s month-end FX rates (London 4PM); 2) adding back the relevant fund’s monthly ongoing charge figure; then 3) deducting the Pengana WHEB Sustainable Impact Fund’s management fee of 1.35% p.a. The WHEB Listed Equity strategy did not operate between 1 January 2012 and 29 April 2012 – during this period returns are zeroed. The Henderson Industries of the Future Fund’s and the FP WHEB Sustainability Fund’s GBP net track record data is historical. Past performance is not a reliable indicator of future performance. The value of the investment can go up or down.
2. The Fund incepted on 31 October 2007 as the Hunter Hall Global Deep Green Trust. The Fund was relaunched on 1 August 2017 as the Pengana WHEB Sustainable Impact Fund employing the WHEB Listed Equity strategy. This strategy was first employed on 1 January 2006 by the Henderson Industries of the Future Fund and currently by the FP WHEB Sustainability Fund.
3. Annualised standard deviation since inception.
4. Relative to MSCI World Total Return Index (net, AUD unhedged)
* For further information regarding fees please see the PDS available on our website.