The Allianz RCM Global EcoTrends Fund has managed to resist the downward trend in the markets since its launch in February 2008 and has maintained its top position in the IMA Global Growth sector. Focusing on investment in the three main areas of eco-energy, pollution control and clean water, we believe that despite current market volatility which means we are operating in challenging times, over the mid to long term the themes will continue to grow in strength.
We were rewarded by generating strong levels of demand from both investors and advisers. Within the six months of its existence the fund has built up assets in excess of £15 million and had subscriptions of more than £1.5 million over the last two months. Reflecting this, it has been added to the range of eight fund platforms, including Winterthur, Cofunds and Skandia.
Global EcoTrends is based on the premise that with environmental issues increasingly becoming a major global focus in the 21st century, many companies stand to benefit from this phenomenon – namely those that provide solutions to environmental problems and those that utilise those solutions. The Global EcoTrends strategy seeks to invest in companies falling within the three areas of eco energy, pollution control and clean water, which are seen to have exposure to fast growing markets, leading market positions, technological differentiation and strong secular themes. By concentrating on these eco-sectors, we actively support the development and deployment of environmental solutions, without limiting our bottom-up approach to stock selection such as through imposed ESG (environmental, social and corporate governance issues) or SRI-type screening criteria. Stocks are evaluated on the basis of the quality of their management and business processes as well as on their market valuation.
The philosophy recognises that the environment is increasingly having a significant impact on businesses and financial markets. Population growth and industrialisation are putting a strain on limited resources such as fossil fuels, precious metals and fresh water. Historically high oil prices have heightened interest in alternative sources of energy. Similarly, a tightening regulatory environment around the world is forcing companies in all markets to commit more resources to clean business practices. While it is foreseeable that these global trends will probably last for generations, companies working on solutions appear to be benefiting already.
With respect to the development of oil prices, the fund finds itself in a relatively benign position: contrary to common assumptions, the correlation between eco-energy and oil is in fact rather low, and much more pronounced between the theme and the price of electricity – the products’ actual output. In the current political situation and with the world anticipating the election of a new US president, the fund offers an excellent win-win scenario: While an election of Republican candidate McCain would mean strong support for nuclear energy, setting off its own dynamics for the alternative energy space, an election victory for Obama would mean direct support for alternative energy. Both candidates have been outspoken in support of a carbon cap-in-trade system, which will indirectly cause utilities companies to reconsider their carbon footprint.
The Allianz RCM Global EcoTrends fund is still the UK’s only environmental technology Oeic with a focus on the three themes of eco-energy, pollution control and clean water, and it remains unconstrained by any negative screening procedures. Global EcoTrends is also diversified across the globe as well as across the entire environmental technology sector. We believe Global EcoTrends remains one of the most attractive, thematic investment solutions of the day.
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The Allianz RCM Global EcoTrends fund aims to achieve long-term capital growth by investing in companies across the globe that are directly active in ecoenergy, pollution control and clean water.
