Sustainable investment not only protects the world for tomorrow’s generations. It can also provide superior returns for investors.
The move to safeguard the world’s natural resources will benefit companies that can provide solutions to the global environmental challenge.
With the Pictet-Global Environmental Opportunities (GEO) fund investors can capture investment opportunities from across the $2 trn environmental sector, a market which Pictet Asset Management expect to grow 6 per cent per year (1).
At a glance
- Invest exclusively in companies solving global environmental challenges such as pollution control, water supply, renewable energy, waste management and sustainable agriculture. The fund is also a good option for those who don’t want to invest in sectors such as oil and gas or mining.
- The fund invests in the world’s most environmentally-responsible public companies – those with a small environmental footprint and that are building products or services that have a positive impact on the environment.
- Pictet Asset Management believes the fund could be a good alternative to traditional global equity funds for this portion of an investors’ portfolio, and for those who want to benefit the environment whilst investing.
Performance that does not have to cost the planet
Investors don’t necessarily have to compromise on performance if they want to invest sustainably. As leaders in both thematic and responsible investing, we combine the two to deliver strong investment performance for our clients, as well as sustainable growth for the planet.
PICTET-Global Environmental Opportunities FUND
Source: Pictet Asset Management. Data as of 31.12.2019. Performance is for the I USD share class, net of fees. Past performance is not a guide to the future.
How can investors measure the environmental benefits of their investments?
Once a niche activity, environmental investing is now moving into the mainstream. The problem investors face is that there is no universally accepted method for measuring a company’s environmental footprint. So how do you know if your fund is delivering the environmental benefits it promised?
Our distinctive process is based on a scientific, rule-based framework. The Planetary Boundaries model was developed in 2009 by a group including scientists from the Stockholm Resilience Centre and identifies nine of the most critical environmental dimensions that are essential to maintain a stable biosphere required for human development and prosperity. These include carbon emissions or climate change, fresh water, land use, biodiversity and others.
The team use this framework to identify companies with the strongest environmental credentials across their entire value chain, from the extraction of raw materials and manufacturing processes, through to distribution and transport, product use, disposal and recycling.
Using the Planetary Boundaries framework to compare Pictet Global Environmental Opportunities versus MSCI World Index
Source: Pictet Asset Management, NEOSIS, 30.06.2019
As the chart above shows, the fund achieves a significantly more positive environmental impact than that of a typical global equity index across all nine dimensions, particularly in climate change. For example, as shown above in the top left chart, carbon dioxide emissions of companies in our portfolio stand at 454 tonnes of CO2 equivalent per million dollar of annual revenue (tCO2 eq/mn$), compared with 1,948 tonnes for the MSCI World index.
What are the risks?
- Past performance is not a guide to future performance. The value and income of an investment can fall as well as rise and you may not get back the amount originally invested.
- The fund may be invested in emerging markets. Investments in emerging markets can potentially be of higher risk and volatility than those in developed markets.
- Investments are made in assets that are denominated in foreign currency and are not hedged back to the base currency of the fund. Changes in exchange rates may therefore affect the value of the investments.
(1)Source: Pictet Asset Management 2018.
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