Investment Report 3rd December 2020
Markets ended November substantially higher – with the UK achieving its best monthly growth – primarily due to news of vaccines and the ongoing support for furloughing. Perhaps a change of President has helped too. Whilst there has been bad news on redundancy, particularly in the retail sector, the expectation is that growth will be back to pre-Covid levels by mid to end 2022. Markets do look that far ahead and with three vaccines being viable now, there is a good chance we will be close to normal by the summer.
The following chart shows the US and UK market during November. The FTSE 100 represents the 100 largest companies in the UK and the S&P 500 represents the 500 largest in the US. The Dow Jones is often quoted but this only shows the top 30 companies and is dominated by technology companies.
As explained in my recent confirmation regarding the format of monthly newsletters, this month I am focusing on a fund.
The Jupiter Ecology Fund
This fund is held within our Melodic portfolios, which are our Socially Responsible Investment (SRI) portfolio range for growth.
This investment sector used to be called ‘Ethical’ but as it now covers so much more it has been renamed as ‘Responsible’.
With Governments committing money to create ‘green’ solutions, this is an area that should offer good growth potential for the future and over the last 5 years at least, there has been no compromise in investment returns just for choosing the ‘responsible’ portfolio.
I think this type of portfolio will become more popular in the future and I have a number of clients who use it for all or part of their investments – personally, I have 25% of my pension invested in one.
With most accounts used by clients – unfortunately not all – it is possible to hold more than one Portfolio so if this is of interest please let me know.
Jupiter Fund Managers started in 1985 as a boutique fund manager and has grown to be one the UK’s most successful and respected investment management groups.
The Ecology fund is a slightly more specialist SRI fund due to its focus on investing in companies providing some form of environmental solution. Jupiter has an investment team focusing on this type of investing and Charlie Thomas (Head of strategy) is a particularly experienced investor within this area, so there are strong credentials behind the fund.
The objective of the Fund is to provide capital growth with the prospect of income, over the long term (at least five years) by investing at least 70% in companies anywhere in the world whose core products and services address global sustainability challenges.
Companies must meet both a comprehensive financial assessment and environmental and social criteria including looking at a full range of ethical exclusions.
The fund is currently £561 million in size and is invested in 56 holdings with the largest 10 holdings representing 32% of the fund. This shows it is well spread and that no particular company dominates the fund – the largest holding is 4.7% in Vesta Wind Systems which is a Danish company that designs, manufactures, installs and services wind turbines. They are the largest company of its type and are active in 82 countries.
At the lower end of exposure, the fund has recently invested in the Belgium company Umicore, a metals recycler, catalysis and cathode producer for stationary battery storage and electric vehicles.
The fund has 38% invested in Europe, 10% UK, 11% Japan and 38% North America. The balance is in Asia and cash.
I like the fund’s ethos, management style, asset spread and results. This is why it represents between 8% and 10% of our SRI Melodic Model Portfolios.
The information provided in this report is based on my own opinion and offers no guarantee that expectations will be met. Past performance is no guide to future results.
As always, should you have any concerns you wish to raise, please do contact me.
In the current Covid situation we remain open but prefer to have remote meetings with clients either via video or telephone.
Keep safe
Ian Pennicott AFPS
Chartered Financial Planner