Der Oktober war ein guter Monat für die globalen Aktienmärkte, die eine positive Wertentwicklung von +3,0 Prozent verzeichnen konnten. In diesem freundlichen Marktumfeld generierte der Pictet – Global Environmental Opportunities P EUR (WKN A1C3LN, ISIN LU0503631805) eine Performance von +2,8 Prozent auf Monatsbasis. Pictet-FondsManager Luciano Diana hat für alle Investoren der FondsStrategie SJB Nachhaltig die neuesten Entwicklungen aus dem Bereich der Umwelttechnologie-Aktien parat. Der aktuelle Marktbericht per Ende Oktober thematisiert die FondsPerformance, die Veränderungen im Portfolio sowie den Ausblick für die Aktienmärkte des Environmental-Sektors.
Market review
October proved a good month for risky assets. Global equities gained 3% in local currency terms, as investors welcomed signs of reprieve in the US-China trade tensions and monetary stimulus measures from major central banks. The Fed cut interest rates by a quarter of a percentage point to 1.75%, monetary authorities in Japan and Canada flagged the possibility of lower rates, and the ECB continued liquidity injections. There was also easing in emerging markets, notably in Brazil. US stocks gained about 2%, with the S&P 500 index setting a fresh record high. Stronger than expected economic data from China helped emerging market equities perform better still. The pattern of returns across equity sectors reflected a growing appetite for risk. Cyclical sectors such as technology, financials, real estate, industrials and consumer discretionary outperformed. On the flip side, defensive sectors – consumer staples and utilities – finished the month in the red. Bonds also suffered, down 0.5% globally. The dollar’s weakness was fairly broad-based, as it seems investors closed out some of the extreme long positions in the US currency. Gold benefitted from the dollar’s downfall, climbing 2.5%.
Performance analysis
The fund slightly underperformed the global equity market during the month. A very positive contribution came form the Energy Efficiency segment: MKS Instruments posted good results and pointed to an improving semi market for the next quarter, and Shimano benefited from a good demand for bicycle parts as well as solid execution. The recycling segment performed well, with Smurfit Kappa leading the group thanks to growth driven by innovation and sustainable packaging. Dematerialized Economy also contributed positively, mainly thanks to Applied Materials, which published results above expectation and the belief among investors that 2020 could see a bottoming semi market. The recently bought wood product company West Fraser rebounded as lumber prices continued their recovery. In Pollution control, Horiba stood out because of hopes in the market for increased capex benefiting the company. Some companies had negative results which weighed on the stocks. This is the case for Xylem, the water component maker, hit by the current industrial headwinds; Christian Hansen, the bacteria manufacturer hit by a slowdown in some food markets; Waste Management, with volume growth slightly muted in the quarter; and Orsted, the wind farm company which cut its IRR guidance for future projects.
Portfolio activity – overweightings & underweightings
During the month, we completely sold Kion in Industrial Efficiency. We reduced Equinix in Building Efficiency. We took profits in Croda in Pollution Control as many of the company’s end markets show signs of weakness. In Sustainable Agriculture & Forestry, we reduced CHR Hansen while adding to West Fraser. Finally, we increased Cadence design in Dematerialized Economy.
Market outlook
The fundamentals for our portfolio companies look solid. The secular trends of resource efficiency and pollution control remain strong despite lingering risks associated with global trade uncertainties, decelerating manufacturing activity and a Chinese slowdown. The technologies and solutions that our companies offer remain in high demand because they contribute to costreduction initiatives and address changing consumer preferences. We see further upside due to strong fundamentals, in particular, in dematerialized economy, environmental monitoring and pollution control.
Portfolio strategy
We believe that exposure to environmental trends can offer investors an attractive long-term risk-return profile. We focus on companies that play an active role in contributing to a cleaner environment and a less natural-resource-intensive economy. Our bottom-up investment process results in a concentrated global portfolio that is diversified across sectors and has a strong growth bias. Population growth, economic expansion and the rise of the global middle class are increasing the strain on natural resources. Pollution is becoming a widespread political issue, particularly in developing countries where environmental awareness is rising. With public opinion on environmental policies becoming increasingly favourable, we believe that companies providing solutions to resource scarcity and pollution challenges will experience increasing demand for their products and services. A globally diversified portfolio that benefits from such opportunities should outperform the broader market.
Pictet – Global Environmental Opportunities Management Team
Luciano Diana
Gabriel Micheli
Yi Du
