Last year was a challenging one for investors, with volatility across almost every asset class and major macroeconomic and political uncertainties that are ongoing. This has been especially the case for those investing sustainably. Looking to 2023, we are more excited about the prospects than we have been in years.
By Peter Michaelis, Head of the Liontrust Sustainable Investment team
This confidence comes from the strength of our 20 sustainable investment themes and the quality of the businesses aligned with solving critical sustainability challenges.
We believe that sustainable companies have stronger growth prospects and better management than the market appreciates.
Higher Life Expectancy
Our societies and economies evolve to deliver not only growth in GDP but also a better outcome for people in a progression to a cleaner, healthier and safer world. We have seen one million-fold improvement in computing power, dramatic increases in life expectancy (up five years in the last 20 years) and activities like driving becoming 50 times less fatal per km driven.
Over decades and centuries of a market-based economy, these are powerful, persistent trends. A simple way to think of the mechanism behind this improvement is that society desires these better outcomes: governments, through regulation, incentives or taxation, encourage businesses to deliver solutions; and businesses innovate, scale and distribute the solutions, experiencing strong growth and, crucially, usually less competition as they bring these novel ideas to market.
Simple Way
Think of gene sequencing. This is now a five billion dollar market that delivers a step change in our ability to diagnose and treat diseases (such as the Greek alphabet of coronaviruses). But initially, it required the US government to launch the human genome project at the cost of billions of dollars for the first genome.
Now after many iterations, the business has driven down the cost to hundreds of dollars. Renewable energy has followed a similar pattern. While we are now operating in a very different environment to the past decade, with inflation and therefore interest rates no longer at zero, it is important to use such times of market stress to upgrade the quality of our portfolios.
Cutting-edge Technology
We have taken advantage of the broad-based sell-off to add to certain companies that we have long admired in every aspect except valuation. This was achieved both during the Covid sell-off in 2020 and in 2022. One example is Agilent Technologies, which we have bought for our Liontrust SF Global Growth Fund.
The company is a global leader in quality control and testing, ensuring the food we eat, the air we breathe and the water we drink do not contain harmful chemicals and contaminants. Held within our better monitoring of supply chains and quality control theme, it is also a leader in the supply of research and development tools in the area of increasingly cutting-edge technology related to gene editing.
Sharing Economy
We have also added Ashtead to the Liontrust SF UK Growth Fund, which is the embodiment of the sharing economy. Held within our Delivering a circular materials economy theme, the company rents out industrial, commercial and general equipment across the US, UK and Canada, thus maximizing the utilization of equipment that would otherwise sit idle for long periods and offering assurance that equipment is serviced and maintained properly and is reliable.
Source: Liontrust
In doing so, it allows its customers to concentrate on their core business competencies and reduce their inventories of capital equipment. A legitimate challenge to our approach would be to ask whether our sustainable investment themes have run their course.
Best Improvements
This would only be the case if we had solved every problem and satisfied every need; we are a long way from that! There is still plenty of growing to do for sustainable companies. We are continually reviewing and refreshing our ideas to ensure we are invested in those areas where companies are delivering the best improvements in terms of a cleaner, healthier and safer world and offering strong growth.
Last year was challenging in terms of performance but we have strong conviction in the longer-term prospects of the sustainable businesses we are invested in.
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Disclaimer
This is an advertising document.
Note: This is marketing information. Investment in investment funds is subject to market risks. Past performance results are no indication of future results. Especially performance results referring to a period of less than twelve months are no reliable indicator for future results due to the short comparison period. Issuance and redemption commissions are not included in the performance figures. The domicile of the Fund is Ireland. For interested parties, the Statues, the Prospectus, the Key Investor Information Document as well as the Annual Reports and, if applicable, the Semi-Annual Reports may be obtained free of charge from the Swiss Representative and Paying Agent in Switzerland: RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich.
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust.
Non-UK individuals: This article is issued by Liontrust International (Luxembourg) S.A., a Luxembourg public limited company (société anonyme) incorporated on 14 October 2019 and authorised by and regulated as an investment firm in Luxembourg by the Commission de Surveillance du Secteur Financier (“CSSF”) having its registered office at 18, Val Sainte Croix, L-1370 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register under number B.238295. UK individuals: This document is issued by Liontrust Fund Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518165) to undertake regulated investment business.
