Impax Environmental Markets (IEM)

Impax Environmental Markets (IEM) owns a Portfolio of mostly small- and medium-sized companies that are set to capture the growth opportunities on offer from a growing array of industries delivering innovative solutions to social and environmental challenges. The trust continues to be managed by the long-serving three-strong team of Jon Forster, Bruce Jenkyn-Jones, and Fotis Chatzimichalakis. They focus on six broad areas to help identify potential holdings which are typically held for the long term.

The portfolio, relative to the broader global markets, has been impacted this year by what the managers believe are a number of temporary macro factors. However, the managers also believe this has now taken valuations to attractive levels, with all the premium coming out of the market and no value being ascribed to future tailwinds from expanded government policy and consumer demand (see Performance).

In order to capture this opportunity, the managers have increased their utilisation of Gearing to its highest level in over five years. This has been done with the support of new facilities across a blend of fixed and floating rates and a mix of maturities.

Despite the managers’ optimistic outlook, the shares have slipped to an attractive Discount. The shares had traded at a double-digit premium as recently as 2022, but are now generally trading between a 7 and 8% discount, more than two standard deviations wider than the five-year average. We note that the board have been very active with share buybacks.