BG Positive Change Fund - Update

It's now around two years since I started to move my portfolio away from fossil fuels and into more climate-friendly alternatives. One of the first additions to my green portfolio was this fund from Baillie Gifford so time to update on progress.

Many of the ethical and socially responsible funds use a simple screen to avoid the so called 'sin stocks' such as tobacco, arms trade, pornography and environmental polluters for example. This is a good start but I believe the industry needs to go further and apply a positive screening process to identify those companies which are making an effort to tackle some of the global challenges we face in a positive way.

Baillie Gifford launched their Positive Change fund in January 2017. It is designed to contribute towards a more sustainable and inclusive world for future generations and also provide a decent return for investors. This managed fund aims to outperform the global index by at least 2% over any 5 year rolling period.

Performance since launch  (click to enlarge)

The return since launch has been 184%. Over the 6 months to end June 2020, the fund has returned an impressive 35.7% compared to just 0.8% by the All World Index. Top holding Tesla (9.5%) will have been responsible for a significant part of this performance but also there have been good contributions from biotech company Moderna which was the first to start trialling a Covid vaccine and also Teladoc, a telemedicine company which has seen big demand for remote consultations during the global pandemic.

A new addition to the portfolio is Beyond Meat - a plant-based sustainable alternative to meat and one I have been considering for my portfolio.

All holdings are there because their products and/or services address a global or environmental challenge and are improving the status quo. Here's their 2019 Impact Report

When analysing a company, the management team assess the investment case first and then go on to apply the positive screening. The company must intend to provide a positive change rather than it being incidental to what they do.

Co-manager Kate Fox believes the financial community will play a crucial role in creating a sustainable and inclusive world for future generations.

The fund is invested globally - USA (46%), Europe (26%), Emerging Markets (17%) and Asia Pacific (10%). The fund is expected to remain fairly concentrated with 30 to 40 holdings.

Some top holdings include Tesla, Illumina, Umicore, NIBE, Orsted and Alphabet (Google).

Ongoing charges are 0.60% plus transaction costs which add a further 0.10%.

For me, the holy grail of investing is a positive return relative to the market for the degree of equity/bond risk combined with a positive contribution towards tackling climate change. After nearly three years it's still early days for this fund but it's certainly showing a lot of promise. If it can deliver a return of over 20% p.a. on average and at the same time support business that are part of solving the problems, what's not to like?

Ethical/green investing will not solve all the problems associated with climate change but I believe it will have a part to play. As they say...the future is green or is not at all...

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!