Thematic Funds: The Risks and Returns
By Mark Hoskin, IFA at Holden & Partners
5 September 2011 | Market News | Comments (0)
The Pictet Environmental Megatrends fund invests one third in clean energy, one third in Water, one sixth in Agriculture and one sixth in Forestry. It is the Forestry and Agriculture exposure which provided the fund with its outperformance in August compared to its peer group.
The asset diversity of the Cheviot Climate Assets fund also assisted in its performance. At the beginning of August it was holding 2.6% in physical gold, and 17.7% in fixed interest giving it significant protection from the fall in the equity market. It also has a 13.3% holding in health care companies. The FTSE World Health Care index rallied after an initial fall, ending down only 2.97% compared to a 6.79% fall from the FTSE World index.
IM WHEB Sustainability fund benefitted too from its exposure to healthcare. One of their three investment themes is Demographics, which includes healthcare companies such as Frenesius and Rhoen Klinikum.
Exposure to companies in Forestry, Agriculture, Gold, Fixed Interest and Health help explain for August why the funds above outperformed Schroder Global Climate Change fund and Impax Environmental Markets.
However as a warning this sort of diversification does not always work and a multitude of decisions explain longer term performance. The furthest we can compare all of the above funds is 10th September 2010, the launch date for the Pictet Environmental Megatrends. You will note that from this date the Schroder Climate Change Fund makes a significant improvement in its relative performance.
Readers however should be aware that one month and one year performance is only really useful to understand how a fund is currently investing and not the basis for a long term investment decision.
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Mark Hoskin is a Partner at Holden & Partners. Holden & Partners are Chartered Financial Planners who provide financial advice to high net worth clients, the majority of whom have a significant interest in ethical or environmental issues.
Mark Hoskin graduated with a History degree from Keble College, Oxford and went on to become a Chartered Accountant with Price Waterhouse. He cofounded Holden & Partners in 2003 and is a Certified Financial Planner and Chartered Financial Planner. Holden & Partners set up Worldwise Investor to help both advisers and investors understand quickly and easily how they can benefit from ethical and environmental investment in the UK market.
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The soft closure of the two First State Funds does not mean they are completely closed to new...
The Multi-Asset approach seems to be a sensibel approach.
Our view is that multi-asset investing is a very different discipline to long-only equity (which is...
Has the same sort of definition slipping also happened to Jupiter Ecology? I hope not.
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