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3D five star fund WHEB Sustainability Fund: the 3D Investing perspective



During Good Money Week Blue & Green Tomorrow launched 3D Investing’s 5-Star rating system which allows advisers and investors to pick out the best of the best from the socially responsible investment universe. To find out more read the B&GT Guide to Sustainable Investment or visit Today we take a look at WHEB Group’s Sustainability Fund.

WHEB is a specialist asset manager wholly focussed on sustainable investing, including environmental infrastructure and private equity as well as their listed equity fund. The Sustainability Fund invests in high quality established businesses capitalised at $1 billion or more and which fall into one of four general themes – resource scarcity, an ageing population, urbanisation and globalisation.

The fund provides good global exposure with less volatility than other thematic funds.  The fund management was much strengthened in 2012 when the former Henderson team was recruited and since then performance has been broadly in line with the global index. The level of transparency, communication and understanding of sustainability is exceptional and the fund is therefore one of only a few funds to be awarded a 3D five star ranking.

Investment Strategy & Fund Composition

The Sustainability Fund invests in high quality established businesses, 90% of which are capitalised at $1 billion or more.  Investments address one of four general challenges – resource scarcity, an ageing population, urbanisation and globalisation – and follow a number of social and environmental themes as shown below:

The investment approach is mid-cap, unconstrained and can best be summarised as ‘growth at the right price’.  There is a preference for high quality established businesses with strong growth, driven by the fund’s themes. Valuation is an integral part of stock selection. WHEB integrates environmental, social and governance analysis within traditional financial analysis. The managers believe that this creates a better basis on which to value investment opportunities.  It also enables them to get a better view on the quality of management, and the resilience and risk associated with the outlook for companies.

Ethical Approach & Suitability

The focus is wholly on investing in solutions to environmental and social challenges. Although no formal ethical exclusions are applied, the focus on environmental solutions means that there is far less ethical compromise than many ethical funds. That having been said, stock holdings include China Longyuan (18% coal), Suez Environment (water privatisation) and medical equipment manufacturers (animal testing). All of these are included on the basis of their positive environmental or social attributes.  In addition, sustainability analysis is conducted on all investments under consideration.

Suitable for most investors, but note comments above.

Social Impact

The fund is wholly focussed on solutions to social and environmental challenges, that fall in to one of the funds four core themes.

SRI Capability & Management

WHEB has one of the most capable and well resourced SRI teams and is backed by a company that is wholly devoted to sustainable investing, with a background in sustainable infrastructure. The team seek to promote best practice in the companies in which investments are made. An independent Investment Advisory Committee provides a layer of independent oversight of the Fund. The Committee challenges the managers on their adherence to the fund’s mandate, process and investment philosophy. This committee comprises a diverse and experienced body of independent sustainable investment professionals.

Risk Management

The fund does not have the smaller company bias of many thematic funds and is therefore likely to be less volatile. Despite being a thematic fund, the themes are quite broad and a disciplined approach to fund management means that risks are well managed. Being a global fund, there are currency risks and these are not hedged.


The level of transparency is exceptionally high. Not only are details of all holdings, engagement and voting records made public, but the investment advisory committee minutes are also published, something that is unique in the industry. The fund is also a signatory to the Eurosif Transparency Code.

Financial Performance & Management

Tim Dieppe and Ted Franks are co-managers of the fund. Tim Dieppe was formerly in charge of the ‘Industries of The Future’ funds at Henderson Global Investors where he established a solid track record managing funds with a similar mandate to that of the WHEB Sustainability Fund. Sustainability funds under his charge have outperformed the benchmark index by a considerable margin since January 2006 when he first managed the Henderson Industries of The Future fund.

The WHEB Fund had a bad start under the previous manager but has recovered under the more disciplined approach of the current team. Since the change of management the fund has slightly underperformed the benchmark index, but is also slightly ahead of the average fund in its sector and the performance largely mirrors that of the MSCI World index. The fund is managed on a long-term basis with a relatively long average holding period.

The managers co-invest in the fund and are part owners of WHEB Asset Management.

The average holding period is five years, which allows management to extract full value from fundamental research, and is in stark contrast to short-termism that pervades the investment management industry.

In accordance with the Financial Services and Markets Act 2000, Blue and Green Communications Limited does not provide regulated investment services of any kind, and is not authorised to do so. Nothing in this magazine and all parts herein constitutes or should be deemed to constitute advice, recommendation, invitation or inducement to buy, sell, subscribe for or underwrite any investment of any kind. Any specific investment-related queries or concerns should be directed to a fully qualified financial adviser.


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