Jupiter Green is an investment trust focused on long-term capital growth through investment in companies providing environmental solutions. Launched in 2006, Jon Wallace has served as sole manager of the strategy since February 2021, taking over in a critical year for sustainable investing. The COP26 conference in Glasgow last year brought together world leaders to try to reach consensus on the current climate crisis. “The landscape has changed in the sense that COP26 was a watershed moment,” Wallace explains. “Joe Biden made exactly the right statement that set the tone for the conference, saying it is this decade that will essentially determine the pace of progress for decades to come.” Climate risk and environmental issues are no longer an issue for the next decade or decades, it is a present danger that will soon begin to impact portfolios.
Solutions, not problems
“Essentially, we’re facing a short-term risk and an investment opportunity right now,” Wallace said. “We are aiming for a vehicle with which shareholders can invest in the suite of opportunity solutions associated with addressing climate change.” The diverse portfolio seeks to identify “enablers,” companies, according to Wallace, that are slightly behind but help larger organizations and governments meet environmental ambitions. This includes net zero carbon climate ambitions, but also broader environmental challenges around the circular economy and avoiding the constant depletion of natural capital. “Enablers have a tangible positive impact in the real world,” says Wallace. “These companies are likely to offer shareholders a source of long-term structural investment and growth opportunities as they will become more important in their broader markets as these challenges become more pressing.”
wind of change
Wallace believes the opportunity set is expanding for strong and consistent returns in this space. This involves stepping outside of traditional sectors and investment themes associated with a portfolio of environmental solutions. “A broadening of investment opportunities in the market capitalization space is happening,” he said. “This reflects the fact that many sectors that have so far made quite limited efforts to reduce the environmental footprint are starting to accelerate and change direction. This includes areas such as agriculture and materials, which will provide medium to long-term opportunities. One such company in the portfolio is Evoque Water Technologies, a leading provider of water and wastewater treatment solutions. Among its water solutions are services that tackle “eternal chemicals,” one of which is polyfluoroalkyl, known as FAS. These are man-made chemicals found in everyday items such as fast food wrappers and non-stick cookware. “While finding substitutes for FAS is a priority for investors in environmental solutions, so is the fight against the FAS already present in our environment,” he says. “Evoque provides effective water treatment for SAF and other contaminants.
lead the charge
Across the portfolio, electronic and electrical equipment accounts for 22.5% of the trust. “This market segment covers a range of activities, including energy-efficient lighting and solutions to upgrade power grid infrastructure to enable the growth of clean energy and electric vehicles,” adds Wallace. “Decarbonization goes hand-in-hand with electrification, so while this allocation size may change over time, solutions associated with pockets of this sector are likely to play a pivotal role in achieving long-term net-zero ambitions. term.” The £56m trust is currently trading at an 8.7% discount to net asset value, is not indexed and has a dividend yield of 0.3%.
See also: Jupiter Green Investment Trust Review