Friday, 21 January 2022

Keystone Positive Change - Portfolio Addition

A year ago, this long-standing investment trust moved over from Invesco to the Baillie Gifford stable with a new ethical remit under the management of the team running their Positive Change fund. The move was flagged up by IT Investor who decided to pick up the trust at that early stage.

I have had a good run with the Positive Change fund in my green portfolio since the initial addition back in October 2018. The fund price rose from 154p to reach a high point of 425p last September and a rise of 176%. In recent weeks the price has retreated quite sharply and currently 330p.

However, it seems to make sense to now switch to the investment trust and save platform costs associated with holding funds as the charges are capped for my portfolio of shares and trusts.

Latest Results

The first full year results under the new focus with Baillie Gifford to end September 2021 were released last November (link via Investegate)

Under the previous management, the trust was basically a UK focused growth and income fund with all the usual suspects such as Br American Tobacco, BP, Shell, Barclays Bank etc. and obviously with the new management and a focus on more ethical and sustainable sectors, there has been a complete change of portfolio holdings. These are arranged under four main impact themes similar to the Positive Change fund :

 Education and social inclusion with the likes of ASML (semiconductors), Shopify and Mercado Libre.

Healthcare/quality of life includes largest holding Moderna which has worked hard on finding vaccine solutions to Covid, also Illumina and Dexcom.

Environment and resource use holds the likes of Tesla, NIBE, Orsted and Beyond Meat

Finally base of the pyramid with a focus on social justice has Safaricom and an Indonesia bank

Commenting on future direction, lead managers Kate Fox and Lee Qian said:

“We don't make any attempts to predict the direction of bond yields or markets.  Rather, we try to understand what the next waves of innovation might be and what implications they might have for society and our planet over the next 5, 10 or 25 years.  It feels as if we are on the cusp of several waves of innovation and transformation, including the energy transition, electrification, a material revolution, genetics, AI and quantum computing.  Each of these waves in isolation are exciting; in combination, they could be incredibly powerful. 

Our focus is on identifying the wave makers - the companies driving change and disrupting the status quo - and to play our role in helping the development and scaling of innovative solutions to global challenges by providing long term and supportive capital, something which has sadly become increasingly scarce over the years.  By doing so, we step up to our responsibility in steering towards a more sustainable and inclusive future and can identify exceptional businesses that will deliver attractive returns for shareholders.  We thank you for joining us on what we believe to be an important and rewarding journey for savers, people and our planet”.

The NAV return for the year was 17.3% however due to a reduction in the discount on news of the change of manager, the share price return was 40.9%. It is worth noting that the returns for the BG Positive Change fund have averaged over 30% p.a. these past three years.

Needless to say this is no longer classed as an income fund and dividends going forward will be significantly lower than the 4% generated previously.


More people are starting to realise that we are facing some big challenges from the climate situation. Time is running short to make the changes required to address this existential threat.

How we change a system that has been in place for well over a century will not be easy but there is no doubt that finance will play an important role in the transition and I believe the positive changes promoted by the team at the helm of the Keystone trust are steps in the right direction. These sorts of changes to a more sustainable model need to quickly become the new normal across the business and investment universe. Changing the world starts with investing in the companies that are addressing these global challenges.

The markets have become very choppy in the past few weeks and the share price of KPC has dropped back over 20% from 340p in November to currently below 260p. I have added the trust to my green portfolio at 257p and will top up should there be any further significant weakness later in the year.

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!

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