Which are the most sustainable funds of 2022?

In this article we wanted to see how our readers have answered the question "Can you name any sustainable fund that you currently hold in your portfolio?"

Investor Relations Specialist

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Socially Responsible Investment (SRI) is here to stay, and has become a popular topic in recent years, an investment style that is gaining more and more ground, and which the pandemic has accelerated. Nowadays, there are many of sustainable funds in the market, some of them are applying the well-known ESG criteria, and others work with the exclusion of certain companies or practice impact investing. But out of all this universe, which fund to choose, which are the best sustainable funds?

Last February our Iberian counterpart launched the fourth edition of our Socially Responsible Investment Survey. With this survey, we wanted to understand how professionals integrate SRI in their portfolios, and whether there have been any changes compared to 2021.

In this article we wanted to see how our readers have answered the question “Can you name any sustainable fund that you currently hold in your portfolio?” With their answers, we have put together the following table, where you will find a list of the 6 sustainable funds most present in the selectors’ portfolios in 2022, and an analysis of the fund by the fund manager.

Investment FundCategoryReturns 3 years annualisedReturns 5 years annualised
Allianz Global SustainabilityGlobal Large-Cap Blend Equity11,39%9,10%
BNP Paribas Energy TransitionSector Equity Alternative Energy****
DPAM B – Equities NewGems SustainableGlobal Large-Cap Blend Equity11,83%11,36%
Nordea 1 – Global Climate and Environment Fund*Equity Ecology17,55%7,87%
Pictet Global Environmental OpportunitiesEquity Ecology11,97%9,39%
Vontobel Fund – Clean TechnologyEquity Ecology13,32%7,87%

Source: Morningstar 11/05/2022. * Fund is closed. ** Fund doesn’t have an historic of more than 3 years.

Vontobel Fund Clean Technology

Pascal Dudle, Head of Listed Impact Equities

All business activities have an impact on the environment. A lack of attention to the ecological consequences of these activities has led to enormous environmental challenges, such as climate change, resource depletion and biodiversity loss.

Climate change investment is all about identifying companies that improve our lives, minimise our footprint and achieve good financial results. And those that provide solutions to climate and environmental challenges are likely to gain market share and face fewer regulatory challenges than their competitors in the coming decades.

The Vontobel Fund Clean Technology is an equity fund with a sustainable investment objective to invest in the clean technology sector. The fund aspires to achieve long-term capital growth while respecting risk diversification.

The strategy aims to invest globally, primarily in the shares of innovative companies that offer solutions for clean water supply, clean energy, future mobility, smart buildings, resource efficiency or recycling. The selected businesses offer considerable long-term growth potential and their share price has an attractive upside potential compared to the estimated share price at the time of investment.

The team makes high-conviction, long-term investment decisions based on in-depth analysis. The majority of the portfolio’s assets are invested in companies around the world whose products or services contribute to achieving environmentally sustainable goals.

BNP Paribas Energy Transition

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According to the managers of the BNP Paribas Energy Transition, we can hardly find more catalysts, that is, beyond the existing ones for decarbonisation, decentralization and digitalisation of the global energy system – at least in the next five to ten years. The energy transition discourse has changed significantly in recent months. We no longer speak only about “environmental challenges”.  In the current context of rising inflation, the ability of green energy to reduce energy and electricity prices becomes a new element of the debate.

The sun and wind do not charge for a marginal unit of energy, the cost of producing electricity from wind and solar energy has been greatly reduced and efficiency has increased significantly. However, from 1970 to today, the price of oil has multiplied thirty-fold. Fossil fuels are more volatile and greatly boost successive cycles of economic rises and falls, as well as inflation, while renewables have had a disinflationary effect over time.

The energy transition theme, however, goes far beyond energy and includes sectors and companies that address environmental challenges in the energy, agricultural, industrial and materials sectors among others. Those companies positioned to provide sustainable environmental solutions will do better than those that do not/cannot do so with the same agility. In addition to the established companies, there will be smaller, agile and innovative companies trying to make a name for themselves in this evolving market, and any of them could become a superstar of tomorrow. We believe that finding effective environmental funds requires analysis and an open mind, as well as the necessary conviction to invest with thematic purity and with an unconstrained approach.

As part of our energy transition offering, the BNP Paribas Energy Transition invests in companies around the world that address environmental challenges with their products, processes or services in the energy, agricultural, industrial and materials sectors. The thematic purity of the fund can generate outperformed returns in exchange for higher volatility.

Pictet Global Environmental Opportunities

Luciano Diana, Portfolio Manager

Global markets present a range of opportunities for thematic investing, underpinned by secular megatrends as sustainability, the network economy and globalization, with acceleration in recent years, especially in 2021.  As such Pictet GEO is characterized by secular growth, less prone to cyclicality.  In fact, companies that directly address environmental change have on average generated annual revenue growth 6 to 7% per year in recent years, significantly higher than global GDP. 

We have identified seven segments: renewable energy, energy efficiency, dematerialized economy, sustainable forestry and agriculture, pollution control, water supply and technology and waste management and recycling.  They represent a market opportunity of US$2.5 trillion in an economic transition in its early stage.

Currently, our holdings have sufficient pricing power to navigate an inflationary environment. Also, dislocations in energy markets have put spotlight on the pace and affordability of the energy transition, stimulating corporate investments in energy saving technologies and we expect a healthy demand for industrial solutions.  Also, we see a robust semiconductor demand cycle, driven by automotive electrification and industrial automation, as well as steady demand for building automation.  We expect electrification and digitization to gain momentum, supporting demand for digital product life cycle management, design and engineering software and industrial IoT.  Within renewables, we prefer solar  over wind as is less impacted by short-term logistics challenges, component shortages and raw material price increases. We see convergence of environmental policies across major blocs, with robust demand for environmental remediation and climate resilience in US, bolstered by public infrastructure investments.

DPAM B Equities NEWGEMS Sustainable

Dries Dury, Portfolio Manager

With a long-term investment horizon, innovation in its DNA, Multi-thematic and sustainable; the DPAM B Equities NEWGEMS Sustainable is a strategy that focuses on the winners of the future and has proven to be a core fund of any portfolio, resilient and defensive.

The fund invests significantly in companies that benefit from “stay-at-home” situations and in companies in high-growth areas such as Software and Healthcare Technology.

It is one of the strategies that best exemplifies DPAM’s global sustainable investment convictions. Focused on companies that contribute to the society of the future (at the consumer, corporate, government and environmental levels). The fund invests in 7 main themes that add value to society: Nanotechnology, Ecology, Wellness, Generation Z, E-Society, Industry 4.0, and Security.

The construction of this portfolio is diversified, both in terms of capitalizations and investment themes.  It has 70-80 stocks with different weightings and is fully invested (maximum 5% in cash). NEWGEMS has as its main objective to outperform the MSCI World All Net Return Index over a period of 5 consecutive years.

What makes the DPAM B Equities NEWGEMS Sustainable fund unique?

  • Seven growth themes reflecting key societal long-term changes.
  • Global equity portfolio with positive bias on the us and mid-caps.
  • Selection derives from top-down and bottom-up analysis as well as sustainability analysis.
  • The combination of growth and sustainability can enhance long term returns, potentially due to lower risks.
  • Experienced management team with expertise in thematic and responsible investments.
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Which are the most sustainable funds of 2022?