On Friday we published an interview with Hamish Chamberlayne, Investment Manager for the SRI funds of Henderson Global Investors. Today we take a closer look at those funds.
1. What type of fund/s do you manage and what are their ‘objectives’?
The Henderson Global Care Growth Fund and the Henderson Global Care Managed Fund. Both funds are OEICs (open-ended investment companies). The Global Care Growth Fund invests in equities and focuses on companies that are growing sustainably and that have the potential to generate sustainable returns. The Global Care Managed Fund is a multi-asset fund that has an allocation to global equities, UK equities, and fixed income securities.
2. Who is the fund manager?
The co-managers are Nick Anderson and Hamish Chamberlayne.
3. What are the criteria you use for investing in a company?
We invest based around ten sustainability themes, and these are derived from the four ‘mega’ themes of population growth, ageing populations, climate change, and resource constraints. It is important to note that there is a delicate balance between environmental and social sustainability. The global economy is highly dependent on abundant and cheap energy. Also there is a need to maintain high productivity in order to generate enough wealth to care for ageing populations. Fossil fuels are an incredibly productive energy source and reducing dependence on them, while at the same time maintaining social cohesion, represents an enormous challenge.
Of our ten sustainability themes, five are environmental and five are social. Our five environmental themes are Cleaner Energy, Water Management, Sustainable Transport, Efficiency, and Environmental Services. Our five social themes are Health, Knowledge & Technology, Quality of Life, Safety, and Social Property & Finance. There is one common thread to all these themes – productivity. The only way to collectively achieve a sustainable global economy is to find productivity solutions for both environmental and social issues. It is not just enough to increase the efficiency with which energy is consumed, or to replace carbon-intense energy sources with renewable sources. There is a need to improve the quality and effectiveness of healthcare and the sustainability of consumer products.
4. Do you use positive or negative screening?
We use both positive and negative selection criteria. To be included in the portfolio (positive selection) the investment under consideration must fit one of the ten sustainability themes previously described. In addition, all companies assessed for inclusion must demonstrate acceptable management of long-term strategic risks and opportunities, including environmental, social and corporate governance (ESG) considerations. Rising expectations of business conduct from regulators, customers, employees and society at large are making corporate responsibility (CR) of strategic importance for modern management. Our evaluation provides a rigorous way of understanding performance in these areas, revealing value or risk often ignored by conventional investors.
Our negative ethical investment criteria are used to screen out companies that adversely affect the environment, people, and animals. We avoid businesses related to oil, mining, tobacco, armaments, gambling, the fur trade, genetic engineering, and pornography, among other things. We do not invest in companies that support the activities of oppressive regimes or those guilty of irresponsible marketing practices. For a full list of our funds’ positive and negative investment criteria please refer to our website. The links are as follows:
Henderson Global Care Growth Fund: HGi.co/bzc5
Henderson Institutional Global Care Managed Fund: HGi.co/bzc6
5. Are there any disruptive technologies that you include in your fund?
The funds have many investments in companies that are developing disruptive technologies. Efficiency is currently a major theme for us. We have found several attractive investment opportunities in firms that have strong competitive positions and where we think returns are sustainable.
6. How old are the funds and what are their sizes?
The Henderson Global Care Growth Fund was launched in August 1991 (I and A Share Classes) and has £403.55m of assets under management (AUM). The Henderson Institutional Global Care Managed Fund was launched in October 2000 (I Share Class) and July 2002 (A Share Class) which has £209.90m of AUM.
Figures are as at 31 May 2015, source Henderson Global Investors.
7. What has been the performance of the fund over the past five years?
Henderson Global Care Growth Fund
Henderson Institutional Global Care Managed
Source: at 31 March 2015. © 2015 Morningstar. All Rights Reserved, nav-nav, UK sterling, net income reinvested. Discrete performance data may change due to final dividend information being received after the end of the performance period. Performance is shown net of fees.
Please note that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
8. You offer a wide range of investment funds as an organisation, and not all of them are marketed as ‘sustainable’ or ‘ethical’. How seriously does your firm take sustainable or ethical investment across the suite of funds?
Henderson has a strong commitment to sustainable and responsible investment across all its funds. As a company, we are a founding signatory to the UN Principles for Responsible Investment and implement the principles through the integration of environmental, social and governance (ESG) issues into our investment decision-making and ownership practices. Henderson employs an internal Governance and Responsible Investment Team to work closely with all the investment teams to help facilitate this. The firm subscribes to a wide range of specialist external research on ESG issues and makes this information available to all its fund managers. Furthermore, ESG data is integrated into all risk reporting and fund oversight processes.
9. From a personal perspective, why should people ‘consider’ sustainable investment in its broadest sense (ethical, environmental, clean, etc)? We recognise you can’t give advice, but would welcome your view in terms of considering investing sustainably generally.
We think ethical constraints and financial targets need not be mutually exclusive goals. In fact, we think there is a strong argument as to why a sustainable approach investment can potentially result in superior long-term returns. We tend to invest in mid-sized companies that are developing innovative products or services with the aim of increasing productivity, whether it is in the supply of energy or the delivery of healthcare. These companies have strategies aligned with the long-term themes that are shaping our world and thus we expect them to grow faster and more sustainably than the rest of the market.
Sustainability runs through our investment process. We are looking for quality, well-governed businesses, and those which benefit from a clear alignment of management and shareholder interests. We seek to identify those businesses with sustainable competitive advantages, judicious capital allocation, and sustainable cash flows. We believe that by investing in these types of businesses at the right price we should be able to make money for our investors.
10. With the current volatility in stock markets globally would you have any final comments for our readers about being an investor?
The Henderson Global Sustainable and Responsible Investment Funds adopt a long-term approach to investment. We would encourage potential investors to consider it as a ‘foundation holding’ over a reasonably long investment horizon.
The fund may struggle on a relative basis during periods when large oil, tobacco, and pharmaceutical companies perform well at the same time. However, such periods are usually short-lived and may present some compelling investment opportunities if the prices of our favoured companies have fallen back or appear more attractive to us from a valuation perspective.
Fund specific risks:
Where the Funds invest in assets (including cash) which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.
Funds may be unable to invest in certain sectors and companies due to the ethical screening that they undertake. This may mean that they are more sensitive to price swings than other funds.
Please read all scheme documents before investing. Before entering into an investment agreement in respect of an investment referred to in this document, you should consult your own professional and/or investment adviser.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.
If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.
Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing.
Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored. Ref: 34U
Photo: images money via Flickr
2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage
Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.
Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.
Over a Dozen Events With Losses Totalling More Than $1 Billion Each
The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.
Global Warming Contributed to Hurricane Harvey
Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.
Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.
Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.
That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.
Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.
Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.
Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.
The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.
Severe Storms Cause a Loss of Productivity
Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.
Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.
It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.
Longer and More Disastrous Wildfires Require More Resources to Fight
The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.
The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.
2017: Among the Three Hottest Years Recorded
People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.
Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.
Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.
Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.
Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.
How to be More eco-Responsible in 2018
Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.
Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:
1. Energy – produce it, save it
If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.
It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.
While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.
Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!
2. Don’t be just another tourist
Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.
3. Let your beauty be also eco-friendly
We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t mean that some of the product’s ingredients haven’t been tested on some poor animal.
To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.
It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.
4. Know thy recycling
People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.
People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.
5. Fashion can be both eco-friendly and cool
Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.
All in all
The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.
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