As I was writing my article on climate change
recently, I must admit to a feeling of guilt that I did not hold a 'green' fund
in my portfolio. I have some reservations regarding this sector and suspect
many funds are not really as green as they make out however some are clearly
better than others. I think that being aware of a potential problem brings with
it a responsibility to do something positive. So, time to make amends.
The transition to a more sustainable global
economy is being driven by the pressures on governments and business to respond
to climate changes and global warming which was outlined in the recent report
from IPCC.
This trust's objective is to help investors
benefit from growth in markets for cleaner and more efficient energy, water and
waste services. The trust was launched in 2002 and is run by Jon Forster and
Bruce Jenkin-Jones who have a long term record of experience and expertise in
this market. They see a strong momentum in these areas and wish to appeal both
to those who require growth from their investments as well as those who are
more concerned about the environmental impact of climate change.
Portfolio Holdings
The trust is global and has around 60 holdings mainly in USA (42%), Europe (35%) and Asia/Japan (20%). The main sector focus is Energy Efficiency (35%), Water (19%), Food/Agriculture (14%) and Renewables (10%). The holdings are in mainly small and mid cap
business so this trust's share price is likely to be more volatile. Here is a
flavour of some holdings:
EDP Renovaveis based in Portugal is a
leading global wind farm operator with over 10GW of capacity spread over 11
countries in Europe and the US, where it is the third largest operator.
Umicore listed in Belgium produces cathode
materials for use in rechargeable batteries. Lem is a Swiss company that makes
current and voltage transducers. The managers are excited about the potential
for the growth in the electric vehicle market over the coming decade. Research
suggests the market which currently accounts for around 1% of global sales
could reach 40% by 2030.
They hold Norwegian company Tomra Systems which is
the main supplier of reverse vending machines used for plastic bottle
recycling. Where these schemes are in use, recycling rates increase from around
45% to over 90%.
The global pressure on companies and
policymakers to move away from single-use plastic continues to intensify. In
May, Chinese President Xi Jinping pledged to push the fight against pollution
forward. He signalled a desire to improve environmental quality standards
before 2035. In June, India's Prime Minister Narendra Modi indicated that India
will remove all single-use plastics by 2022, in the boldest move yet to tackle
plastic pollution. Closer to home, the European Commission unveiled new rules
on single-use plastics, which will be banned where ready alternatives are
available - such as with plastic cotton buds, cutlery, plates, straws and
drinks stirrers.
US software company Trimble provides positioning,
wireless and software technology for farming and agriculture to improve
efficiency and improve yields. Farmers can use GPS and sensors to provide
precise nutrients and water levels to crops and monitor the state of their land
with greater precision.
Performance
The trust has turned in a decent performance over
the past 5 years with a total return of
96%. This compares favourably with some of my other holdings - City of
London 33%, Finsbury Gr & Income
75%, Temple Bar 18% and Mid Wynd 99%. Vanguard Lifestrategy 100 has returned
80% over the past 5 years. The return over the past year todate is 7%.
The share price reached a high of 290p earlier
this year but has recently fallen back by 10% which has provided an opportunity
for my initial purchase. Full Year results will be due in March 2019.
From
Latest Half-Year Report (pdf)
"We
expect equity markets to remain volatile. The recent de-rating of the
portfolio, healthy earnings growth, and a diversified positioning provide some
comfort on outlook. We continue to encourage investors to remain focussed on
the long-term growth story underpinning IEM. The overarching global drive
towards more efficient usage of resources and the substantial investments
required to establish and maintain infrastructure in environmental markets all
remain firmly in place on a global basis. More disruptive developments, for
example the transition from internal combustion to electric vehicles or related
to the war on plastics waste, drive additional investment opportunities and
provide a favourable outlook for growth and performance over the long term".
Environmental impact of £10m investment in IEM plc
Net CO2 emissions
avoided 7,940tco2
|
Equivalent
to taking 3,940 cars off the road for a year
|
Total
renewable electricity generated 2,150 MWh
|
Equivalent
to 520 households' electricity
|
Total
water treated, saved, or provided 2,340 megalitres
|
Equivalent
to 18,500 households' water consumption
|
Total
materials recovered/waste treated 1,340 tonnes
|
Equivalent
to 1,340 households' waste arising
|
So, a start is made which has been financed from the sale
of UK income trust Temple Bar. I am also looking at one or two more
possibilities to expand this new sector of my portfolio.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!
Feel free to comment below with your views on
ethical/green investing. Do you hold any funds? If so which ones and how have they
performed for you?
I appreciate your drawing this trust to my attention.
ReplyDeleteAfter some study, I've followed you in with an investment.
I sold my holdings in BATS (a declining winner) and City Natural Resources (a consistent loser) to fund the purchase.
I feel better for that...
Well done steveal! I hope it can continue to deliver reasonable returns for us new investors.
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