PICTET GLOBAL ENVIRONMENTAL OPPORTUNITIES: The £2bn fund that helps to save the planet

Over the past quarter of a century, Swiss-based Pictet Asset Management has built a reputation for ‘thematic’ investing – identifying key long-term investment trends and then setting up funds that hold shares in companies likely to benefit from them.

It’s resulted in a steady conveyor belt of new Pictet funds investing in a variety of ‘themes’ – including robotics, biotech, health and nutrition – and an investment house with more than £32billion of assets under management.

One of its most popular and successful thematic funds is Global Environmental Opportunities, a £2billion fund that invests in companies looking to tackle some of the world’s biggest environmental challenges. 

These include climate change, widespread chemical pollution and increasing acidification of the world’s oceans.

So far, it has performed more than satisfactorily as far as investors are concerned.

 A fund investment of £1,000 made five years ago would now be worth more than £1,920 – far more than equivalent investments in the average global fund (£1,680) or the FTSE All Share Index (£1,360).

The fund is managed by three individuals, but also draws on ideas from the rest of Pictet’s thematic team. There is an independent adviser who provides an insight into the latest environmental developments.

Luciano Diana, senior investment manager, says there are some 400 companies that meet its environmental hurdles for potential inclusion in the fund.

Of these, 50 make it into the portfolio, mostly technology focused and United States based – although Diana scours the globe in search of investment opportunities. 

‘Everyone is currently talking about ESG – environmental, social and governance – in investment circles,’ says Diana. ‘Our investment approach has a strong emphasis on the E while integrating the S and G into our investment process.’

The stock selection criteria that Diana and his team applies is rigorous. No company will be considered unless it is having a ‘positive impact’ on one of nine specific ‘planetary boundaries’ laid down by the Stockholm Resilience Centre at Stockholm University – a leader in research on global sustainability.  

This positive impact could be a result of a company being at the forefront of waste collection and treatment, water technology or energy storage. 

The boundaries are those applying to key environmental issues such as ozone depletion that if exceeded begin to threaten the globe’s existence. 

As a matter of course, it eliminates from its selection process all companies involved in oil and gas exploration, fossil fuels or chemicals.

‘We’re looking for solution providers,’ says Diana, ‘companies that through their products will have a positive environmental impact.’

Among the fund’s top ten holdings are pollution control specialist Thermo Fisher Scientific, renewable energy company Vestas Wind Systems and French water supplier Veolia. 

Diana says companies are typically held for two and a half years before profits are taken.

Although the Geneva-based fund is skewed towards the US, Diana believes this will change as more companies in China and across emerging markets come up with products designed to safeguard the environment. 

The fund’s annual charges are just short of 1.2 per cent and it is not suitable for income hunters.

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