CLIMATE ASSETS: Attenborough effect boosts climate fund investing in electric cars, renewable energy and clean water
Having run the Climate Assets fund for the past 11 years, investment house Quilter Cheviot is not new to investing in environmentally-friendly companies. Indeed, it now manages sustainable investment mandates totalling £350million.
Lead fund manager of Quilter’s sustainable investment strategy is Claudia Quiroz who has more than 20 years’ experience in the sector. She also runs the £157million Climate Assets fund in conjunction with Caroline Langley.
Over the years, the fund has evolved – initially investing in companies involved in the production of natural gas before they were considered to be adding to global warming.
The fund’s portfolio is spread across a range of assets – not just equities – that concentrate on big ‘green’ investment themes
Today, the fund’s portfolio is spread across a range of assets – not just equities – that concentrate on big ‘green’ investment themes. These include electric cars, renewable energy and clean water.
The multi-asset approach is designed to reduce the fund’s volatility and deliver a smoother return for investors.
Over the past 12 months and five years, the respective fund returns are 5 per cent and 68 per cent.
‘When I started investing in sustainable and ethical businesses,’ says Quiroz, ‘the emphasis was more on what companies to avoid – the likes of tobacco companies and arms manufacturers.’
But today, it’s about finding companies that provide solutions to a world that is being impacted adversely by climate change, population growth and resource scarcity.
‘We’re searching for businesses that are able to deliver low carbon energy, clean water and recycle scarce resources.’
The six-strong sustainable team at Quilter pore over about 1,000 companies that are candidates for inclusion, assisted by 22 in-house analysts. The result is a Climate Assets fund that is invested across 60 companies.
The Climate Assets fund that is invested across 60 companies
‘It’s a global strategy,’ says Quiroz. ‘From a sustainable perspective, the UK stock market has structural issues because of its reliance on oil, mining and old economy businesses. So you have to think global in terms of building a diversified portfolio. Also, climate change is a global issue that requires global action.’
The portfolio has more than a quarter of its assets in North American companies – such as US company Aptiv that provides the electronic brains behind many electric cars, and water company Xylem that does everything to ‘ensure water is delivered safely from the reservoir to the home.’
It does not invest in electric car manufacturer Tesla – its shares are overpriced, according to Quiroz – but it is happy to invest in companies such as Aptiv and German giant Infineon Technologies that supply parts.
Among its key renewable energy holdings is Portuguese company EDP Renovaveis – a generator of electricity from renewable energy – and wind farm specialist Greencoat UK Wind.
Quiroz says the fund has attracted greater interest from investors over the past two years.
‘Sir David Attenborough has helped,’ she says. ‘People increasingly want to invest in companies that are having a positive impact on the environment – and feel good about how their money is being invested.’
The only company that has recently spilt out of its portfolio for unethical reasons is Irish buildings materials business Kingspan. In recent months, it has courted widespread criticism for the use of its combustible insulation boards in the refurbishment of Grenfell Tower which caught fire in 2017, claiming the lives of 72 people.
‘We sold our position last autumn,’ says Quiroz. ‘It no longer met our threshold for inclusion in the fund.’
The fund’s income is equivalent to just below two per cent a year. The stock market identification code is B3K3HX1.