IMPQ Monthly Report
- The Future Impact Small Caps Fund was up 1.5% net of fees, outperforming the benchmark return by 1.8%.
- It is a key goal of the Fund to demonstrate that there is no performance trade-off to invest with a focus on sustainability and ESG. Since inception in May 2019, the Fund has delivered a 20.2% p.a. return net of fees, outperforming the benchmark by 12.8% p.a.
- Positive contributors this month included Calix (+46.0%), Australian Ethical (+39.2%), Mach 7 Technologies (+14.8%) and Mercury Energy (+7.3%).
- Negative contributors this month included Control Bionics (-10.6%), 4D Medical (-9.5%) and Iress (-5.7%).
|Month (%)||Quarter (%)||FYTD (%)||1 Year (%)||Since Inception* (% p.a.)|
|eInvest Future Impact Small Caps Fund||1.5%||19.3%||30.2%||18.5%||20.2%|
|S&P/ASX Small Ordinaries Index||-0.3%||13.0%||20.0%||5.4%||7.4%|
|Added value (detracted)||1.8%||6.3%||10.2%||13.1%||12.8%|
^Inception date was 23 May 2019. IMPQ returns are calculated using net asset value per unit at the start and end of the specified period and do not reflect the brokerage or the bid ask spread that investors incur when buying and selling units on the ASX. Past performance is not a reliable indicator of future performance.
Better Future Highlights
Readers may recall that portfolio company Calix has developed the Low Emissions Intensity Lime and Cement (LEILAC) carbon mitigation technology for use in the cement production process. The lime & cement industry is a large carbon dioxide emitter and represents approximately 8% of global carbon emissions.
Last year the company announced that it had entered into agreements with a number of European parties, including Heidelberg Cement to participate in the LEILAC-2 Project to significantly scale-up the technology
During January, Calix announced that CEMEX, one of the largest cement companies in the world, has joined the LEILAC-2 project. As part of the announcement the Global R&D Head of Cemex said “Amongst the different technologies that we are pursuing, it is one of the most promising technologies to mitigate CO2 emissions in clinker production.”
The LEILAC technology is just one aspect of Calix’s business. It also has an environmentally friendly, wastewater odour control business and is conducting R&D work in next generation battery technology.
The eInvest Future Impact Small Caps Fund has a strong focus on investing in companies that are making a positive contribution to a better future.
It is a key goal of the fund to demonstrate that there is no performance trade-off to invest with a focus on sustainability and ESG. Since inception in May 2019, the Fund has delivered a 20.2% p.a. return net of fees, outperforming the benchmark by 12.8% p.a.
This is a pleasing result for investors, particularly as many of the stronger contributors to this return are also making a positive contribution to a better future.
For the month of January, the Fund was up 1.5% net of fees, outperforming the benchmark return by 1.8%.
Positive contributors this month included Calix (+46.0%), Australian Ethical (+39.2%), Mach 7 Technologies (+14.8%) and Mercury Energy (+7.3%).
Negative contributors this month included Control Bionics (-10.6%), 4D Medical (-9.5%) and Iress (-5.7%).
As mentioned overleaf, Calix announced that Cemex, one of the world’s largest cement companies had joined the LEILAC-2 Project.
Australian Ethical provided a positive quarterly update. Mach 7 Technologies announced that it had signed a significantly expanded contract for the company’s medical enterprise imaging software platform with the Adventist Hospital group which has 22 hospitals on the west coast of the US and Hawaii.
Control Bionics was weaker after a strong performance in December and 4D Medical released a quarterly update which suggest that the company’s near-term progress in the US was being impacted by COVID restrictions.
A number of other companies in the portfolio delivered quarterly updates during the month.
Positive updates were delivered by Janison Education, Genetic Signatures and Netwealth, while a number of portfolio companies indicated short term delays to progress due to COVID restrictions in the US and Europe. These companies including EROAD, Fluence, Imricor and Limeade. We expect outcomes for these companies will improve as COVID conditions in the northern hemisphere taper.
After the market’s strong run we sought to position the portfolio a little more defensively during the month. To this end, we increased our holdings in telecommunications provider Spark NZ and diagnostic imaging holding Integral Diagnostics. We also increased our holding in Equity Trustees.
During the month, we reduced our holdings in Telix Pharmaceuticals, Sims Ltd and Australian Ethical after strong recent performance.
At month end the Fund held 41 stocks and cash was 8.0%.
For January, the weighted average Perennial-derived Environmental, Social, Governance and Engagement (“ESGE”) Score of the Fund was 7.2 which is 26% higher than the benchmark ESGE Score of 5.7.
We took advantage of a quieter January to undertake a number of engagement initiatives with our portfolio companies:
- Gender Diversity: We sent emails to companies that have less than 30% representation of women on the board, in line with the goals of the 30% Club. We detailed the business benefits of a diverse board and management team, and requested the appointment of appropriately qualified independent female directors to the board. We have had positive engagement responses, particularly from Telix Pharmaceuticals, Charter Hall Social Infrastructure & City Chic.
- Remuneration & say on pay: ASX best practice is to place a remuneration report up for shareholder vote. We took the opportunity to write to companies who do not have say on pay vote, typically internationally based companies, to encourage alignment with best practice. We had a positive response from EROAD.
- We had a call with Fluence, the wastewater and reusable water solutions business. We have been engaging with the company for some time on gender diversity on the board and were informed the recruitment was in process. We also discussed the governance of a dual CEO/chairperson role. It was acknowledged that best practice in Australia is to have an independent non-executive chair and we expect this to be addressed in the medium term.
This is analysis done on the Sustainable Future Trust portfolio as at Feb 2020 by the Sustainable Platform
To read more about eInvest Future Impact Small Caps Fund (Managed Fund) ASX: IMPQ, click here.
Interested in purchasing units in the fund? Contact your financial adviser or simply purchase via your online broker, and as always read the PDS for more information. This can be found here.
Past performance is not a reliable indicator of future performance. Please read the PDS prior to investing. This information is general in nature and is subject to the terms and conditions outlined here.