06 August 2019
Top Ten Holdings (as of 30 June):
Schneider Electric (France)3.7%
Waste Management (US)3.3%
Siemens (Germany) 3.2%
Suez (France) 3.2%
TE Connectivity (Switzerland)3.1%
American Water Works (US)2.8%
The $840 million Pax World Funds Environmental Markets Fund invests in companies that are developing "innovative solutions to resource challenges".
It was commended by the judges for "the breadth of environmental solutions covered whilst ensuring outperformance of its benchmark".
It has significantly outperformed the MSCI ACWI Index over the past 12 months, with the institutional asset class delivering 8.71% to 30 June, against 5.74% for the benchmark. Since its launch in March 2008, the fund has posted an average annual return of 6.16% against 5.47% for the index.
At the same time, it has achieved significant environmental impacts. For every $10 million invested, the fund claims to have delivered the following benefits:
- 1,230 MWh of renewable energy created;
- 159 million gallons of water saved, treated, or provided;
- 2,810 tons of materials recovered or treated; and
- 160 tons of carbon dioxide emissions avoided.
Energy efficiency and water have by far the biggest sector allocations, representing 34.5% and 24.7% of the AuM respectively, as of the end of June. These have always had the heaviest weightings, as "they are where we find the best business models," explained Bruce Jenkyn-Jones, managing director, listed equities at Impax Asset Management, who has been responsible for managing the fund since its launch.
Food, agriculture and forestry is the next biggest sector with 14.4%. This has seen steady growth in recent years, from less than 3% of the portfolio in 2012, Jenkyn-Jones noted. Renewable energy currently represents just 1% of the portfolio.
US stocks currently account for about 54% of the fund's holdings.
Impax engages with investee companies to encourage them to adopt higher ESG standards. Specifically, it asks management of carbon-intensive firms to report their greenhouse gas emissions and set emissions reduction targets compatible with limiting future global warming to 2oC.