WHEB Sustainable Impact Fund

Investing in industries of the future, solving sustainability challenges for the world

May 2023 - Monthly REPORT

The merry month of AI


This month Ted Franks discusses the hot topic of artificial intelligence (AI). Although outside of our investible universe at this stage, Ted considers the complexities and challenges of this technology. Time will tell how AI capabilities translate into sustainability solutions.

George Latham (Managing Partner) spoke to Nick Searle from Zeus Capital about his career so far, the changing attitudes towards sustainable investment, and what inspires him.


Top Holdings (alphabetically)

Advanced Drainage Systems Inc
United States
Advanced Drainage Systems is a leading provider of stormwater management systems in the US. It is the leading manufacturer of high performance thermoplastic corrugated pipe, providing a comprehensive suite of water management products and superior drainage solutions for use in the underground construction and infrastructure marketplace. The products of the company are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials.
United States
Information Technology
Ansys is a market leader in multiphysics engineering simulation software for product design and optimisation. The company follows a strategy of Pervasive Engineering Simulation to enable innovation. Its software accelerates product time to market, improves engineering and optimises product quality and safety for a variety of products including fuel efficient cars and planes, wind turbines as well as medical technology and consumer products.
Autodesk Inc
United States
Information Technology
Autodesk is a global leader in 3D design and engineering software and services. Its products are used by architects, engineers and designers to design, develop and manufacture and operate a vast range of products, buildings and services. Autodesk tools are a critical component in the design and operation of more resource efficient products and buildings. They can deliver significant resource savings, due to their impressive capabilities and critical position in design process. The product brands include Autodesk 360 cloud services, AutoCAD civil 3D and LT, 3Ds Max, Maya, and Revit.
Health Care
CSL develops medical products for serious and life-threatening diseases. Its core business is as a provider of human blood plasma-derived products to treat bleeding disorders, rare and serious infections and autoimmune diseases. CSL also manufactures vaccines and related products, including for flu and cervical cancer, as well as other products that speed up recovery times for patients that have undergone heart surgery, organ transplants and burns. The company provides these solutions across North America, Europe, Asia, Australia as well as other parts of the world.
United States
Health Care
Danaher is a diversified business that designs, manufactures and sells laboratory equipment and consumables to clinical and medical laboratories including microscopes, analytical software and imaging and molecular devices. These tools are used in the development of new drugs and for diagnosing critically ill patients. In addition, the company also designs, manufactures and sells equipment to test and treat water (incl. UV water treatment systems). Overall, Danahers products offer improved efficiency and reliability.
United States
Health Care
ICON is a clinical research organisation (CRO) which provides outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. The mission of the company is to accelerate the development of drugs and devices that save lives and improve the quality of life. ICON specialises in the strategic development, management and analysis of programmes to support all stages of the of the clinical development process.
Linde PLC
United States
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.
Power Integrations Inc
United States
Information Technology
Power Integrations is a pureplay manufacturer of integrated power-conversion components. Unlike traditional power conversion solutions requiring dozens of components, the integrated solutions of the company reduce the bill of materials and the size of the integrated circuit board. Power Integrations has strong market positions across a range of end markets including industrials and renewable energy, and a leading position in consumer appliances in particular.
United States
Health Care
Steris provides a variety of products and services to the healthcare industry including specifically to hospitals, medical device manufacturers, pharmaceutical and biotechnology businesses as well as for food safety and industrial markets. The main areas of activity of the company are in providing hygiene, sterilisation and anti-microbial treatment services to these end markets in order to ensure a safe and hygienic operating environment.
TE Connectivity
United States
Information Technology
TE Connectivity is a US-based manufacturer of electronic components and wireless systems. The main market of the company 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.

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

WHEB Sustainability Themes


Performance Table

WHEB Sustainable Impact Fund 0.9% 9.1% 4.9% 6.2%
Strategy (partial simulation – see below) 5.8%
MSCI World Total Return Index (net, AUD unhedged) 1.1% 13.1% 11.9% 11.2% 7.0%

Swipe horizontally to see all columns

Fund & Strategy Performance


Market Review

May was a positive month for global equities, with conflicting factors playing on market direction.

In the US, the House of Representatives passed a bill to lift the US debt ceiling and it is now expected to be approved in the Senate. The prospect of a US default had been a headwind to sentiment.

The potential of artificial intelligence drove interest in a small number of very large companies that are seen as likely to dominate the technology. One of those companies, chipmaker Nvidia (which does not qualify for our investable universe) announced exciting growth projections and its stock soared as a result.

The sheer size of these “tech titans” allowed them to lift a US equity market that was otherwise struggling.   Such has been the “narrowness” of leadership, that the largest ten stocks in the S&P 500 account for all the index’s returns so far this year.

Please note that none of the companies mentioned in this Market Review are part of our strategy’s investment universe as these companies do not provide goods and services that address sustainability challenges. This is the primary factor explaining our benchmark relative performance this year.

There were good reasons for negative sentiment outside these largest names.  The prospects for a global recession worsened as Chinese output slowed and measures of industrial confidence weakened.  The divergence between the services and manufacturing sectors widened: recent PMI (Purchasing Managers’ Index) data point to a contraction in manufacturing, while services are still expanding supported by robust labour markets.

That labour market tightness and sustained strong wage growth, along with stubbornly high recent inflation data have fuelled expectations of further interest rate rises from the US Central Bank.

Japan was the strongest performing major equity market over the month as investors were attracted by modest valuations and signs that the country’s persistent deflation may finally be coming to an end.  Japanese CPI (Consumer Purchasing Index) data came in at 4.1%, the biggest rise since 1981.

The UK was the poorest performer due to its high exposure to commodity markets, which weakened.  Oil ended the month down about 40% from the same time last year. Industrial metals were also weak as global demand faltered and commodity intensive activity in China slowed.

Technology and Communication Services were the best performing sectors while Energy and Materials were the weakest. The strength in the Technology sector helped growth styles to outperform.

Fund Review

The Fund delivered positive performance during the month, rising 0.9% which is broadly in line with the MSCI World, which rose 1.1%.

In a reversal to the previous month, Power Integrations and First Solar, along with Advanced Drainage Systems and ICON, were the best performing stocks over the month. Advanced Drainage Systems is a leading provider of stormwater management systems in the US. The company reported its full year 2023 results during the month, which were ahead of guidance.

Fisher & Paykel, Agilent, and Aptiv were the largest detractors of return. Fisher & Paykal’s results disappointed on the margins as did its FY24 outlook. Agilent reported strong 2Q23 results, but sentiment around biopharma has deteriorated and full-year guidance was lowered due to weaker instrument demand.

Resource Efficiency and Cleaner Energy were the strongest themes during the month and the largest contributors to performance, while Health and Environmental Services were the weakest.

Not holding some of the mega-cap tech/those stocks benefitting from Artificial Intelligence, along with the Fund’s mid-cap bias has been a headwind for performance in relative terms.


Sentiment remains cautious. Recent economic data has been solid, and markets expect further interest rate increases.

Companies within the portfolio remain resilient in the current environment. While there is uncertainty in the short term, we remain confident in the long-term positioning of our holdings.


The merry month of AI

May seems to have been the unofficial artificial intelligence (AI) month.  Every day seemed to bring a new development, every conversation seemed to include it, every opinion-writer weighed in on it.  The noise built to a dramatic crescendo the day before the end of the month.  On 30 May, the newly formed “Center (sic) for AI Safety” (CAIS), published the most wonderfully punchy position statement I can remember:

“Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

Let’s park, for the moment, what climate change possibly still needs to prove before it makes that list.  Notwithstanding that oversight, the CAIS is an impressive organisation.  It’s not made up of lobbyists, politicians, or regulators: instead, these are the luminaries of the AI world itself, mostly engineers and creators who’ve devoted their lives to it.

There are plenty of other concerned voices too. And, on the other side, plenty of those that see the incredible potential, and are more sanguine about the risks.

These existential debates are now in full swing. So we should share the two key points we see right now about AI; how it impacts our strategy, and your investment.

The first, grander point is that we do lean to the more optimistic side. We kind-a have to.  Our strategy is to invest in companies that provide solutions to sustainability challenges.  In most cases, that is about technologies – tools, skills, know-how – and technical solutions. And AI is a doozy of a tool – it looks like it might be the best one yet invented.

Just how good is easy to see at ground level.  There are some incredible stories now, like Jan Oskam, a Dutch man who can walk again after ten years after being paralysed in a motorcycle crash.  AI is acting like a “thought decoder” to send the signals to his spine, that otherwise couldn’t get through.  Or, combining AI with spatial data to track and control fish stocks, apply fertiliser efficiently, reduce methane emissions, or manage pretty much anything else that moves.

The helicopter view is that AI will slice through the Gordian knots of sustainability.  We have previously talked about a VUCA world, a term we borrowed from the US military.  VUCA stands for volatile, uncertain, complex, and ambiguous.  It’s not clear if the world could ever not be volatile or uncertain.  But AI will certainly solve the complex and ambiguous.

The second way AI impacts the strategy is more prosaic.  One of the other reasons that May was unofficial AI month is that it left a pretty big print on global markets.

On 24 May Nvidia, maker of the kind of graphic-interface chips on which a lot of AI relies, issued quarterly guidance that beat analysts’ consensus by more than 50%. The stock rose 24%, taking it to over US$1trn in value, where it remains.

A host of other smaller companies which feed the AI value chain have had similarly positive experiences, both in fundamental outlook and share price. But it has boosted the “usual suspects” of the tech world too. Amazon, Alphabet, Microsoft, and Meta all have big plans for AI, and no-one (even governments) can match the money they will invest in it.

This has resulted in very “narrow” stock-market leadership. The largest ten names in the US S&P500 index have provided all of that index’s gains so far this year.

As we explained in our webinar for the second quarter of 2020, our overweight in technology stocks doesn’t include these mega-cap names. The technology they provide can be put to many purposes. We want to invest in the clever application of the core tech, to real-world sustainability challenges.

Those sustainability-focused AI companies are not here yet. Indeed they may not arrive in that form– it’s probable that those companies already experts in their fields, will more quickly learn how to adapt the tool to boost their productivity.

We are already seeing examples of this in our own portfolio. Contract research organization ICON Plc is using AI to predict the outcomes for patients in its trials. Water equipment company Xylem is using AI to predict infrastructure damage risks.  Spatialisation specialist Trimble uses AI to help minimise transportation accidents.

These are still early days though. As exciting as these initiatives are, it can still be frustrating as we watch the recent leaps forward in AI capability, and wait for it to translate into broader sustainability solutions. But we know that at the same time, the sustainability challenge is only intensifying.  As the sustainability pressure builds, the opportunity for those that can really harness this new potential will grow and grow.


  • AMP North
  • ANZ Grow Wrap
  • Asgard eWrap
  • BT Panorama
  • BT Wrap
  • Centric
  • CFS FirstWrap
  • FNZ
  • HUB24
  • IOOF
  • MLC Wrap
  • Macquarie Wrap
  • Netwealth
  • Mason Stevens
  • OneVue
  • Praemium
  • Powerwrap
  • uXchange




  • FEES * Management Fee: 1.35%
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 271.8m
  • FUND INCEPTION DATE 31 October 2007

Fund Managers

Ted Franks

Partner, Head of Investment

Seb Beloe

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
Harding Loevner International Fund
Axiom International Ethical Fund
Axiom International Ethical Fund
Axiom International Ethical Fund (Hedged)
Axiom International Ethical Fund (Hedged)
Australian Equities Fund
Australian Equities Fund
High Conviction Property Securities Fund
High Conviction Property Securities Fund
Global Small Companies Fund
Global Small Companies Fund
WHEB Sustainable Impact Fund
WHEB Sustainable Impact Fund
Emerging Companies Fund
Emerging Companies Fund
High Conviction Equities Fund
High Conviction Equities Fund
Pengana International Equities Limited (ASX: PIA)
Pengana International Equities Limited (ASX: PIA)
Private Equity Trust (ASX: PE1)
Private Equity Trust (ASX: PE1)
Alpha Israel Fund
Alpha Israel Fund
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit 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. No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. 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.