Two Years of Being the Change

We are now approaching the two year anniversary of our Carrington Sustainable Growth portfolio, in acknowledgment of the changing perceptions towards Environmental, Social and Governance (ESG) factors. This portfolio is available on a number of the platforms we use and can be invested in via your ISA’s, Pensions and GIA’s.

There have been many conversations around these points over the years, but they have gathered momentum and importance in recent times as people have come to realise that we cannot continue on the same path both environmentally and socially.

OUR INDUSTRY

When we launched the portfolio, many investment managers in the UK were slow to come round to the idea of investing sustainably and some were sceptical. Since then, we have seen widespread adoption of the theme which is accelerating. Independent research suggests trillions of US Dollars will flow into the theme and associated companies over the next five years.

Given the sums of money involved, the corporate world has not been able to turn a blind eye. We have subsequently heard from an array of companies with regard to their ambitions of becoming carbon neutral at some point in the future. Companies that do not respond risk being side-lined by the investment community and could even lose their competitive advantage.

We are very proud to have been at the forefront here and provide access to this theme for our clients via the Carrington Sustainable Growth portfolio. If you would like to read more about the portfolio, click HERE.

FOOD FOR THOUGHT

KEY THEMES

The themes running through the portfolio have become even more important following the pandemic. Technological adoption, healthcare innovation and clean energy are the key themes running through the portfolio and the adoption of the underlying companies is accelerating.

Below are some examples of the companies currently held in the portfolio.

Vestas Wind Systems is a widely held Danish company which is the energy industry’s global partner on sustainable energy solutions. Vestas design, manufacture, install and service wind turbines across the globe. They currently have installations in 84 countries.

 

Moderna has become a household name due to being one of the first companies to develop a Covid-19 vaccine. The company is currently held in the Baillie Gifford Positive Change fund. The fund actually purchased the company during the beginning of 2019, long before the pandemic, because they saw a lot of potential in their technology.

Moderna are pioneering the use of messenger RNA (mRNA) to help our own bodies combat a range of illnesses. This technology has demonstrated its efficacy during the Covid-19 pandemic and we expect significant developments in the near future.

 

Aptiv are a global technology company servicing the automotive industry. They design and manufacture vehicle parts to tackle problems such as accidents relating to human error and CO2 emissions, as well as trying to improve the connectivity of vehicles to enable a more automated future. Their products should lead to lower CO2 emissions from vehicles and fewer deaths on the roads.

PERFORMANCE

A common misconception is that investing sustainably comes at the cost of performance. From its launch, the Sustainable Growth portfolio has been our best performing portfolio. 2021 has been a more challenging environment, as the winning ESG sectors have been set aside in favour of sectors that have struggled during the pandemic. However, we remain focussed on the long-term outlook which is only heading in one direction; greater ESG adoption.

Performance of the Carrington Sustainable Growth Portfolio against the FTSE 100 between June 2019 & May 2021. The Sustainable Growth Portfolio performance chart is net of fees.

A long-term study has in fact demonstrated that funds operating via an ESG mindset have on average outperformed their peers over the past ten years. Given our comments above, we see no reason why this won’t continue for the next ten years and so expect our core portfolios to increasingly integrate ESG funds.

SUMMARY

The adoption of ESG investing is accelerating. I would not be surprised to see ESG metrics being integrated into almost all funds in the years ahead and them becoming a default part of the investment process. We should therefore also expect an increasing number of companies to adhere to good sustainable practices and the range of sectors to increase and not be focussed on just the current few. This will create a natural tailwind behind our Sustainable Growth portfolio.

As you can tell this is something we as a team are very excited and passionate about, so if you would like to discuss this further, assess risk suitability and check the availability of the portfolio on your platform, please either drop us a line or give us a call, we’d love to hear from you.

 

 

 

 

 

 

This publication has been prepared for information purposes only by Carrington Investment Consultants Ltd t/a Carrington Wealth Management. The value of investments, and any income generated from them, will be affected by interest rates, exchange rates, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which it invests. Investors should be aware that the value of units may well fall as well as rise, is not guaranteed and that past performance is not a guide to future performance. Different funds carry different levels of risk and investors may not get back the full amount invested.