Home / Opinion / Two strategies focused on a better future

Two strategies focused on a better future

Here are two susintable investing managed funds

The demand from investors for “sustainable” investment products has doubled in the past two years. There are now so many options available for investors to choose from, it can be difficult to choose the right product that aligns with one’s sustainability goals. If you aren’t sure what stocks to buy, a good way to gain meaningful exposure to this sector is through the use of managed funds. For this article, we’ve listed two managed funds that we think will give good portfolio exposure to sustainable investing.

Nanuk New World Fund

Nanuk’s New World fund has been around since 2015 and invests in global equities exposed to the broad theme of environmental sustainability and resource efficiency. The fund uses positive (inclusionary) screening, and negative (exclusionary) screening, together with ESG filters, to help select stocks that meet the UN’s Sustainable Development Goals (SDGs).  The fund excludes any companies that have exposure to armaments, gambling, human rights abuses, labour rights violations, nuclear power, pornography and tobacco. It includes companies that have exposure to education, “green” property, healthcare and medical products, renewable energy and energy efficiency, social and sustainable infrastructure, sustainable land and agricultural management, sustainable transport and sustainable water.

  • The fund invests in companies that benefit from, or contribute to, improving global environmental sustainability and resource efficiency. The fund says its “approach is primarily bottom-up and focused on identifying stocks that Nanuk considers mispriced and then constructing well-diversified portfolios of such opportunities.”

    Last month’s performance was negatively impacted by the fund’s underweight exposure to the Energy (Oil & Gas) sector which outperformed significantly during the month and cost inflation and supply chain disruption arising from the Ukraine crisis. The fund opened two new positions: Carrier Global Corp (NYSE:CARR) and Kone Oyj (HEL:KNEBV).

    Nanuk says “CARR is  a leading provider of building efficiency solutions focused on heating, ventilation and air conditioning (HVAC) and fire & safety. It also offers vehicle refrigeration. Carrier is benefitting from increased investment in building energy efficiency and indoor air quality and increasingly sophisticated building management systems. The fund previously held a position in Carrier that had performed strongly and was exited in early December 2021, since which time the stock has underperformed and it now offers more attractive return potential.”

    Kone Oyj (HEL:KNEBV) – Is listed on the Nasdaq Helsinki and is a global elevator and escalator business. It offers elevators, escalators, and automatic building doors. Nanuk says, “providing solutions to improve the efficiency of people flows with buildings and the urban environment. The company stands to benefit from increasing renovation rates aimed at modernising and improving the efficiency of the existing building stock.”

    Here is the Nanuk New World portfolio as at the end of March 2022

    Australian Ethical Australian Shares Fund

    Australian Ethical is one of Australia’s leading ethical fund managers. By investing responsibly in well-managed ethical companies, the fund delivers competitive financial performance and positive change to society and the environment. Every year, 10 per cent of profits are distributed to charitable organisations and social impact initiatives through The Australian Ethical Foundation. The opportunity to invest in a diversified share portfolio of companies predominantly listed on the ASX and selected on the basis of their social, environmental and financial credentials. The fund uses an active stock-picking management style with stocks generally selected for growth rather than income, with a bias towards smaller capitalisation stocks listed on the ASX.

    In a similar fashion to the Nanuk New World fund, this fund also had a bumpy ride during March, mainly because of its underweight in the Materials and Energy sectors, which performed strongly on the back of the crisis in Ukraine. Despite this, Australian Ethical continues to be attracted to small companies believing they offer the most attractive risk/return equations over the medium to long term.

    During March the fund added to existing holdings in payments company EML Payments (ASX:EML) and Nitro Software (ASX:NTO). EML shares crashed by 35 percent following the release of the company’s third-quarter result. Underpinning this result was the operating performance of the company’s European prepaid business which EML payments described as “significantly behind”. This business has been impacted by remediation activities which gave way share price weakness. Australian Ethical has added to its existing holdings because of this share price weakness.

    Here are the top-10 holdings in the portfolio:

    Print Article

    Why bank analysts prefer this quality lender over the rest

    Morgans have released a summary of the key points from the recent bank reporting season. Of the banks that reported, Morgans says NAB was in line with consensus expectations, while ANZ and WBC beat consensus earnings expectations. Despite this, Morgans holds NAB as having the strongest 1H22 performance overall. NAB produced the strongest profit growth…

    Ishan Dan | 18th May 2022 | More
    Two of the most bullish bets on the ASX

    Markets around the world are still in freefall as losses mount as a result of investors moving out of risk partly due to inflation fears and supply chain disruptions partly due to the crisis in Ukraine and Covid lockdowns in China. The market is yet to become comfortable with the rate hike cycle that is…

    Ishan Dan | 18th May 2022 | More
    Top of the pops – top global funds had one thing in common

    March stands out as being one of the most difficult periods for investors in a generation. On the one hand, bond markets send fixed income to its worst return in more decades, and on the other, equity markets were sold off broadly on valuation concerns as bond yields ended a forty-year downward trend. It is…

    Drew Meredith | 18th May 2022 | More
    What does High Conviction mean?
    Ishan Dan | 10th Mar 2021 | More
    Inside CSL’s big end of year deal
    Lachlan Buur-Jensen | 15th Dec 2021 | More
    Battery materials in short supply but valuation is key
    Ishan Dan | 25th Mar 2022 | More
    Behind Brickworks’ (ASX:BKW) record profit
    Jaz Harrison | 25th Mar 2022 | More
    Is JB Hi-Fi the best retailer in Australia?
    Lachlan Buur-Jensen | 25th Mar 2022 | More
    Three ASX stocks ripe for a takeover
    Lachlan Buur-Jensen | 23rd Mar 2022 | More