Case for environmental investing gets stronger -Jupiter
The case for environmental investing has never looked stronger as the pressures of a burgeoning global population and ever dwindling natural resources make environmental solutions an imperative, says Charlie Thomas, manager of the £402m Jupiter Ecology Fund.
“Since the Fund launched 25 years ago, the world’s population has risen by over two billion to pass the seven billion mark. This growth has been accompanied by the rapid expansion of a global middle class that is likely to reach some five billion people in the next 20 years.
“The acceleration in demand for resources – energy, food, materials and water – can only continue to gather pace. Rising to the challenge of these pressures are a growing number of companies offering innovative ways to ease this resource bottleneck.”
The Jupiter Ecology Fund was the first retail unit trust to invest in environmental technology stocks when it was launched in April 1988.Over 25 years, the fund has returned 523.4%.
Since Thomas started managing the fund nearly 10 years ago, it has returned 127.3% compared to an IMA Global Sector average of 95.2% and a return of 116.2% for the Fund’s benchmark the FTSE World Index.
The Fund has just adopted the FTSE Environmental Technology 100 Index as an additional benchmark to the Fund’s main benchmark, the FTSE World Index.
The index, which launched in April, tracks the 100 largest companies that derive at least 50% of their business from environmental markets. These include renewable and alternative energy, energy efficiency, water infrastructure and technology, waste management and technologies and pollution and environmental control services.
David Harris, director, FTSE, said: “We have seen huge changes in the shape of the market: in the recent past it was dominated by a small number of large renewable energy companies. Today it is more diversified with the Energy Efficiency (31.1%) and Water Infrastructure and Technology (21.7%) sectors representing the largest sector weights of the Index.”
Thomas noted that the type of companies the fund is buying has also changed over the years, mirroring the broader range of sectors that will be tracked by the FTSE ET100 Index. The fund is more diversified, holding shares in companies involved in activities from energy efficiency, sustainable food production to metals recycling and water conservation.
Some of the biggest holdings include Cranswick, a producer of high-welfare pork products, Stantec, a provider of sustainable design and consulting services for the built environment and United Natural Foods, a US distributor of natural, organic and specialty foods.
Symbolic of the growth in environmental solutions companies is RPS, a company that has been in the Fund since launch. It has grown from a firm with a market capitalisation of less than £10m to a major global environmental consultant in energy infrastructure with a market cap of £580m as end March..
Thomas said firms know that the era of generous subsidies is over and environmental businesses recognize the need to compete on a level playing field with traditional businesses in order to survive. Alternative technologies and services are becoming a more economically viable choice for companies and consumers.
Thomas believes the golden age for environmental investing has only just started.
Renewable energy sources in the UK, for instance, still only account for 9.4% of all electricity generated; organic food makes up just 4.2% of all food sales in the US while 67% of all waste in the EU is still dumped in landfills or incinerated.
“The opportunity for companies to step in and offer transformative solutions to these environmental issues has never been greater.”